for a very heavy tax bill indeed, even after allowing for unilateral refief. The foregoing, if my understanding of the position is correct, could well account for the difficulties experienced by the Political Adviser to the Governor and the Assistant Political Adviser in resolving their tax problems. This is, I understand, very much a live issue. and should be looked at again in the light of correspondence which Mr. Marsh of Hong Kong Department has exchanged with Inland Revenue on the subject.
Receiving Government's share of the costs.
5. There remains the question of the contribution to be made by the receiving godernment for the services of an officer of the government of the sending state. It would be tidier administratively if the receiving state were to refund the whole of the costs arising from the appointment, but we would probably have to obtain C.S.D. authority to pay Hong Kong rates to a Hong Kong Government official filling a Diplomatic Service post in London. We would certainly have to get C.S.D. ahthority to implement a scheme whereby the receiving government repaid the lending government at the receiving government's rate for the job. I do not know what allowances and other fringe benefits the Hong Kong Government pay their officials serving in London, but I imagine that on balance we would end up owing the Hong Kong Government a fair sum of money.
6.
It looks as though whatever arrangement is finally agreed, it will have to be cleared with the C.S.D. If it is considered that the transfer arrangement is sufficiently far advanced for an approach to be made to the C.S.D., perhaps Hong Kong Department would be good enough to start off a draft giving the reasons for proposed exchange of staff.
7. C.S.D. attitude towards subsidised appointments.
7. It might be of interest if I mention in conclusion the attitude of the C.S.D. to subsidised appointments. Mr. Andrew Clark was appointed to the United Nations Secretariats in 1966 on D.S. terms against repayment of his U.N. emoluments.The Treasury made it clear at that time that they would only agree to such an arrangement if the appointment was essential in the public interest and only in the case of senior appointments (Grade 3 and above). Since then, one other similar case has been authorised. It will require very strong reasons indeed to convince the C.S.D. that an exchange arrangement on the lines suggested is essential and this, I am afraid, is likely to be the criterion.
(P.B. Thompson)
Personnel Services Dept.
22 July 1970.
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