CO129-582-7 Taxation 6-6-1939 - 5-2-1940 — Page 12

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April the 1st, 1940.

budget would cover -

Expenditure under this special

(a) the administrative cost of Income Tax

Department;

(b) existing defence services (i.e., volunteer

forces and A.R.P.) excluding the statutory defence contribution;

(c) special war expenditure (internees,

censorship, Information Department, mobilization, etc.);

(a)

(e)

the acquisition or construction locally

of such naval or aircraft as the military authorities' might consider useful for the defence of Hong Kong;

to

the balance would be voted as a free

gift to H.M.G. in aid of general war expenditure additional to the defence contribution which is now fixed at $6,000,000 annually.

The yield of such a tax is roughly

estimated at $10,000,000 annually, and the total

available for (d) and (e) above might well amount

to something like $7 million annually.

X

B.

Ordinary revenue to be supplemented by

(i)

x

see (13)

NISA

(ii)

Yes. The Gur cleanly says that' this statutory defines Com Eibution is to be refanied in the

additional taxation designed to check imports, which is expected to yield over $1,000,000 per annum (details to follow later); and

the adoption of certain minor recommendations

of the Taxation Committee which might yield about $100,000 per annum (see note at 5).

The effect of these proposals on the

ordinary budget would be to convert the present

small deficit into a surplus of $1-2 million by

relieving it of all defence expenditure excluding,

presumably, the fixed defence contribution.

The proposals seem to me generally sound,

budget - Wu and the idea of a separate budget for war expenditure

Ordinary is cumly right. Gilly.

with distinct sources of revenue strikes me as a

particularly good one. The Taxation Committee's

report