CO129-615-2 Income tax 10-3-1947 - 6-2-1948 — Page 9

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of avoiding undue hardship in the Colony's present circumstances, but also that the essential thing at this stage is to establish machinery of direct taxation, and secure the necessary measure of support for it in principle, since it is not to be expected that subsequent adjustments will present the same order of difficulty. The present guess is

that, in spite of the various concessions made, the total yield for the current year will be in the neighbourhood of $16,000,000. The fact is of course that the potential revenue to be derived from the direct taxation will be nothing like fully tapped in the current year. Our telegram at No. 8 on -/46 emphasised the importance we attachedto putting the standard rate at as high a level as

the Governor considered practicable? -and- I see that the Bill at annexure B to No. 18 provided for a standard rate for 1947/48 of 25%. Its subsequent

reduction to 10% may cause adverse comment from the Treasury, but I think we must accept the advice that the measures embodied in the Ordinance represent the most it is feasible to achieve in present

circumstances, and that to have attempted more at the present stage would only have resulted in harder and more widespread opposition. I suggest we must judge the measure essentially on a long-term view.

4. Para. 19 of the despatch point out that opposition to the measure has not yet been silenced, and that the future attitude of the European community will depend on the efficiency with which the

Inland