ENG-1958 — Page 74

Chapter 4: Public Finance and Taxation

THE Colony's Statement of Assets and Liabilities at 31st March 1958 is at Appendix III and analyses of the Colony's Revenue and Expenditure in the financial years 1956-7 and 1957-8, together with the Estimates for 1958-9, are at Appendices IV and V.

Apart from the cost of external defence, to which, however, a contribution is made, Hong Kong is financially self-supporting, raising revenue from local sources to meet the cost of all local works and services. The Colony's Legislative Council is the sole taxing and spending authority. There are no financially independ- ent subsidiary bodies such as local government authorities in the United Kingdom.

During the year an important development occurred when the Secretary of State granted a considerable relaxation in financial control. In 1948 the Colony was released from Treasury-control and given a large measure of autonomy over its own finances. The control which the Secretary of State still retained at the time was that his approval was required for the annual Estimates, for supplementary provisions exceeding $1 million in the case of capital expenditure and $4 million in the case of recurrent expendi- ture, for the issue of any loan and for any expenditure involving important points of principle. Under the new procedure the Colony's Legislative Council becomes the only authority in such matters and the previous system of control is replaced generally by informal consultation between the Financial Secretary and the Finance Branch of the Colonial Office. Prior approval of the Secretary of State is, however, still required in certain matters including currency and banking.

Since the first post-war financial year, when in spite of the legacy of the war years there was only a very small deficit, the budget has been balanced each year and in many years a sub- stantial surplus has accrued. The financial year runs from 1st