CAB11-57-2 — Page 92

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to ascertain with accuracy what amount of revenue is actually raised in the San On district. Owing, however, to my having persuaded a certain party, who is in a position to know what revenue is collected, to give me the information desired, I am able to attach a statement, which may be regarded as a fairly reliable account of the revenue raised annually in the territory to which the Convention refers (Appendix 8).

This statement shows that the total annual revenue of the new area is estimated at $163,636.14, or, say, £16,000.

It must not be supposed that the magistrate pockets all the difference between the regular and irregular revenue. Superiors have to be kept in good humour, an effect which cannot be produced without a considerable outlay; underlings must have their share of the spoil; and not a small portion of it is secured by those who farm various items of revenue, for which they pay much less than they make out of them.

Owing to the inspection of the new territory having been somewhat hurried, it was not possible to institute a minute inquiry into all the items of revenue. Some of these may not be regarded as satisfactory sources of revenue, and may be ultimately aban- doned, whilst it may be deemed advisable to modify the mode of collecting others. For instance, the revenue derived from opium. includes a duty on raw opium, which pro- duces annually $23,611.11. In Hong Kong the duty on opium is charged not on the raw but on the prepared article, which in the new territory is said to yield only $4,166.67 a year, an amount obviously much lower than that which could be collected. And the same remark is applicable to other items of revenue, which, when British rule is estab- lished, will be greatly increased. However, until further experience has shown in what manner revenue can be best raised without exciting the suspicion or irritating the feelings and prejudices of the inhabitants, it would be well to interfere as little as possible with the present system and sources of taxation. If this be done, it is antici- pated that there will be no difficulty in raising at the start an annual revenue sufficient to meet the cost of administering the new territory. The expenditure is estimated at $125,000. To cover this outlay taxation to the amount of 14 dollars or 2s. 6d. of the population will be sufficient.

per

head

Expenditure.

Appendix 9 contains a statement of the expenditure which, it is estimated, will be required to cover the cost of administering the new territory. It amounts to $125,000.

The chief items of the estimated expenditure are:-

Police

Surveyors Miscellaneous

Total

$33,223

$14,400

$24,657

$72,280

When the work of survey has been completed such a large staff of surveyors will be unnecessary, but it is important, as has been pointed out, that the land under cultivation should be surveyed as quickly as possible. Miscellaneous expenditure has been esti- mated at a high figure, as unforeseen expenses are sure to be large when the territory is first taken over.

Loan.

The finances of the new territory should be kept distinct from those of Hong Kong, and, so far as can be judged, there seems to be no reason why it should not be self-sup- porting as soon as it has been taken over. But the collection of the annual revenue will necessarily take some time, especially at the commencement of British rule, and before that rule has been established, it will be necessary to have in hand funds sufficient to meet current expenses and to cover initial outlays. for officers' quarters, for a gaol, for a school, will have to be constructed; the present Buildings for public offices, roads will have to be improved and new ones made.

To meet this expenditure I recommend that recourse be had to a loan. The Government of the new territory might be empowered to borrow up to a maximum amount, and to arrange with a local bank for an overdraft, so that it could obtain such advances, not exceeding the amount it has been authorised to borrow, as it may from time to time require.

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