CO129-623-8 Estimates of Expenditure- includes a report for the year ending March 1951 1-12-1949 - 31-3-1951 — Page 274

OUTWARD TELEGRAM.

PROM ME SECRETART OF STATE FOR THE COLONIES.

MSIKITIN 19 CREWZORUMS THE BANK FALTEN

55652/50

Cole

TO HONG KONG (Sir A. Grantham)

Sent 7th March, 1950. 22.00 hrs.

उपयु

IMEDIATE

No.326 Confidential.

My telegram No.320.

Estimates,

I note that ca the present basis of taxation a deficit of X7 million is estimated In 1950/51. Whilst revenue estimate may be on the erscrvative side, I hove agreed in my telegram under reference that the estimated deficit should be covered by raising the standard rate of Farmings and Profits tax fron 107 to 15%%; I hope increase can be made effectivo from 1st April, 1950.

2.

With regard to Rehabilitation loan I have agreed in my telegram wjer reference that an additional payment of $5 million should be made to sinking fud. Up to date only 150 millions of the Joan has been raised while Ican expenditure has consiĉorably excceded this. ssuming it is not feasible to raise further instalment of lown would it not be praforable to (7 set) sgainst særplus balaaces such portion of this uncovered loen expenditure as would leave (say) the equivalent of six months revenue in reserve to provide apalast unforeseen contingencies. This would have additional advantage of presenting a finanddal picture vhich is more realistic and more likely to be

This wetter could io conlucive to the acceptance of additional taxation. neccesary form separate subject of discussion with Treasury during Follows ' visit here, It would in any case be desirable to await outecme of discussions on outstanding claims before finally deciding the matter.

3. Should the 1950/51 budget outtımm assisted by an increase in rate of Forniars and Profits tax again result in a big surplus you may wish t consider utilising soce part of it either (a) to meet any further portion of the rehabilitation expenditure still in suspense, or (b) to be croiited to s Supplementary Sinking Puæd not directly related to the Rehabilitution Loan but available either for that loan or any further loan which way be raised:

Q X

(e) to be credited to a Development Find in anticipation of the heavy extenditure which will be requirød on this nccount, in sklition to fuis for this purpose raised by loans and frea C.D. and 7. funds.

The above possibilities can be considered in greater detail iř necessary when the 1950/51 cuttura becomes clearer.

5. With regard to the statement about cost of living allowances which I agread in my teleren under reference should be made, yoa vill no dob2 appreciate difficulties this question presents, particularly in regard to expatriate staff. It would be difficult (1) to justify increase in pensionable erolments so scan after the salaries rovision and (11) to increase tensions merely cu account of the. present cost of living in the Colony (many paasions would be payable outside the Colony where the same high cost of living does not prenda).

Cour sent to:-

Breasing

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Col. Russoll Edmonds.