50%.
5. The Governor of Hong Kong's exemption from income tax arises from local Hong Kong legislation. It may be worth researching the history of that, to see for example whether it was introduced at the same time as the Royal Family's exemption, which came into force in 1935. If so, that would tend to reinforce the political linkage between the two issues.
6. As regards a short-term holding line, my advice remains that the Governor should say that:
the Prime Minister has just announced the outline of the arrangement with the Queen;
-
- the question of the Governor of Hong Kong's exemption from salaries tax is determined by Hong Kong legislation;
- I will obviously want to study the full memorandum on the question of the Queen's tax position (to be published in the New Year) and any implications it may have for Governors of Dependent Territories and to consult his advisers before responding to questions on the subject.
7.
One health warning: we have not been able to check today whether the above is fully consistent with what the Governor said publicly when this was last a topical issue in Hong Kong. But I am sending a copy of this fax to Richard Hoare, who may be able to let you have advice on this point.
You
ever
Peter.
PF Ricketts
Hong Kong Department
m.dinham.GEN.JRB.BE
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