TNAG-0475-FCO40-540-Contributions-of-Hong-Kong-for-costs-on-maintaining-military-1974 — Page 5

Mr Wilford

CONFIDENTIAL

he

13/8

HONG KONG:

1.

DEFENCE COSTS AND TAXATION

+P.W

14/8

Just before he went on leave, Mr Stuart told me that you would like us to discover the cost of keeping a major unit in Hong Kong; and the approximate yield of a 1% increase in Hong Kong taxation.

2.

Cost of a major unit

BD

According to the Ministry of Defence (Mr Jones of DS 1, who asked that his figures should not be quoted outside the Department, or in official papers, without further consultation), the estimated 1974/75 functional costs for Hong Kong are:-

1 UK infantry battalion

1 Gurkha battalion

£2.9 m

Hong Kong costs

£1.1 m

Share of Nepal costs

£0.4 m

£1.5 m

Functional costs are apparently defined as the running costs of the Forces concerned, including pay and allowances of personnel, and an attribution of the cost of works and equipment.

3.

Earnings and Profits Tax

The estimated combined yields of earnings and profits tax are as follows:

1973/74 (revised estimate) 1974/75

HK$ 1,643 m

HK$ 1,715 m

It appears that if profits tax and the maximum overall rate of earnings tax were both increased from 15% to 16%, the increased yield would be about HKS 100 million per annum, or rather more than £8 million.

30 July 1974

cc: r Male

MiMale En Ouation

б

wwalt

12.1. home.

R B Crowson

Hong Kong & Indian Ocean Dept

The Governor is already talking ņ

Proval from 15% to 16% %% or Рожня

may

не

7/

caret

purposes. At leas

to reach

inflated

increas

17% for

social

another 1% would

1/2 the zoot of the intended

C-Ooty

CONFIDENTIAL

I estimate

be

garrison

at

MW%

1975776