CO129-597-2 Estimates 1949 1-3-1948 - 14-7-1949 — Page 202

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202

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INWARD TELEGRAM

TO THE SECRETARY OF STATE FOR THE COLONIES RECEIVED

TOCOPY FOR REGISTRATION

FROM HONG KONG (Sir A. Grantham)

D. 14th July, 1948.

R. 14th

No.677 Confidential.

11.15 hrs.

14 JUL 1948 0.0. REGY.

14

Your telegram No.751.

EIVED

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I note your approval of the estimates.

Revenue receipts for first three months of the current financial year total $38,861,212 against estimate for twelve months of $151,407,950, expenditure for the same period should not exceed $30,000,000. Out of estimate of $40,000,000 for earnings and profits tax, less than $5,000,000 have been collected, but Pudney considers that estimate will be realised if staff difficulties can be surmounted. It therefore appears probable that the year's working should result in a moderate surplus, even allowing for payment of $5,000,000 for Kai-Tak resumption, as yet unexpended. This assessment of the position takes no account of certain debts outstanding to this Government since 1941, such as that of over $2,000,000 from the War Office referred to -in Sir Mark Young's despatch No.80 of 10th April, 1947.

I shall address you shortly regarding similar debts due from Governments of India and Burma, and I trust that you will endeavour to secure settlement of these accounts during the present financial year.

5136/40/475

Ivm cive to Scarlett

h

3. Probable surplus for 1947-48 is in the neighbourhood of 850,000,000. Against this surplus will be charged total of items referred to in my confidential

44126/6/18 telegram No.487 reducing figure to approximately

$30,000,000. I agree with your view that it would be see (16 Aje desirable substantially to increase the surplus to provide

for future commitments, but public opinion here is still extremely sensitive over the war expenditure settlement and the fact that budget surplus has to be used to meet war period liabilities was adversely commented on in unofficial speech on settlement. I have no doubt that there would therefore be violent apposition to any suggestion that surplus, depleted by charges which are still regarded rightly or wrongly as proper imperial commitments, should be reinstated by additional taxation. Moreover further taxation of tobacco or of Chinese liquor would give rise to increased smuggling and I am of the

opinion that my further increase in the duty on European liquor would show a diminishing return. Purchase tax, apart from the inherent difficulty of administration,

presents the more immediate and at the moment insuperable problem of staff and accommodation. It appears to me that a simple and acceptable means of raising additional funds would be by means of a state lottery, such as I understand is now carried on in Gibraltar and in Malta, and I should be grateful for an early indication of your views on this matter and of copy of Colonial Legislation and other information on the subject. I should favour tickets of a price would would be beyond the means of the working class.

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the

The preliminary investigation mentioned in paragraph 13 of my despatch No.100 has had to be suspended in consequence of staff difficulties, but small reductions in merial and clerical staffs have made. Unwe? come economies are being effected by the

/resignation