TNAG-2677-FCO40-3874-Hong-Kong-garrison-withdrawal-plan-1993 — Page 115

is that the DCA in its present form will not survive the first skirmish in

Finance Committee.

6.

That is the reason why that the Governor has advised that asking for

supplementary provision for the DCA is out of the question. It would be

counter-productive to try.

7.

However, neither the Governor nor HKG can legally vote large sums of

public money without the approval of Finance Committee. That is the

reason why I have asked persistently that MOD together with other

arms of UKG involved to treat the tax question seriously. We were not

much forward on this occasion. And time is running out. Those involved

in the DCA talks on the Hong Kong side are well intentioned and stand

ready to help. I strongly advise that it would be in the interests of all

concerned if UKG could gracefully settle the question of UK income tax

in a way that it would help contain the HKG portion of the 1994-95

DCA expenditure, including any overhang, within $1350 million. I must

admit that in offering $1350 million for DCA payments in 1994-95, I

have stuck my neck miles out, given the wide publicity of the over 60%

reduction in garrison strength in 1994-95.

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