265
substantial
of malthy ringres considerable refugee influx from China.
4. Whilst therefore I appreciate your difficulties
in persuading non-officials of greater desirability
of increased taxation the proposals for this in your
paragraphs 6 and 10 are in fact very modest, in view of
much larger increases in recurrent expenditure and against
background of continuing commercial prosperity of
Hong Kong. Tax Assessor staff position has, I understand,
considerably improved during the last year and I should be
glad to learn whether in view of this you consider that
some increase in the standard rate of Earnings and Profits
tax is feasible.
5. As regards paragraph 5 of your telegram see my
telegram No.253 of the 3rd of March.
6.
objections
As regards paragraph 7 of your telegram if the
vant to which you refer are in fact raised, you
will presumably reply to the effect that in many cases
no exact division between expenditure which should be
chargeable to revenue and that chargeable to loan is
possible, and that in times of commercial prosperity
it is only prudent to meet from revenue as much of
current expenditure whether on capital account or on
recurrent account as is reas
that the
freasonably possible in order to
avoid having to bear the burden of loan charges when times
loan
(15104/17/1/49)
bolong may
are less prosperous. Moreover increased taxation with its
wider application and absence of any interest charges is likely
to be a more effective action against inflationary tendencies
than the procedure of meeting expenditure from loan funds
even where the loan is raised locally.
7. On the question of further borrowing referred to in
paragraph 9 of your telegram I am telegraphing separately.
(54126/4/49)
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