ANNEX IX
Page 411
(Para. 96 of Report)
FINANCIAL ARRANGEMENTS
1. In the light of the proposals made in the Report for the allocation of services and functions, federal expenditure at a rough estimate would amount to about £10 million assuming that expenditure under the various heads remains at about the same level as in the recent past. The main source of federal revenue should be. Customs duties, which would on a similar assump- tion yield about £4 million a year. After allowing for the revenue of self- supporting services (mainly the Post Office: £1,600,000 a year) it would be necessary to provide further revenue which at the outset might thus be of the order of £4 million a year. (These figures do not include the revenue and expenditure of statutory commissions which would come under the control of the federal Government, such as Rhodesia Railways and Central African Airways.)
2. It is proposed that the additional amount required should be raised by enabling the federal Government to levy its own income tax without interfering with the present power of territorial Governments to raise revenue from the same source and to determine their own income tax policy. There would therefore be both federal and territorial income tax legislation; and in the general interest there would have to be some machinery for consultation between federal and territorial Governments on income tax matters to co-ordinate policy as far as possible, so as to ensure that neither the federal Government nor any territorial Government took action which would prejudice the clear needs of the other Governments. This machinery, which would be purely consultative, could be provided by the proposed Economic Advisory Committee (see para- graph 18 of Annex IV), which would be a joint body of the federal and terri- torial Governments. It would also be necessary to consider whether the administration and collection of federal and territorial income tax should be undertaken by each Government separately or should be entrusted to a federal department acting also on behalf of the territorial authorities. The relative merits of the alternative courses would no doubt be discussed between the three Governments, along with the many other matters that they would have to consider together in preparation for the introduction of the federal scheme.
3. The power of the federal Government to levy income tax, and the transfer to it of customs revenue and of the expenditure on those services which would become federal, would affect alike the revenues and expenditure of the three territorial Governments. When the arrangements for transfer of depart- ments and services to the federal Government had been fully settled, a fiscal conference representing the three territories should meet to assess the savings which would accrue to, and the losses of revenue which would be incurred by, each of them. The conference should recommend a general financial settlement between the federal Government and the Govern- ments of the three territories. The settlement should include provision for the equitable division of the burden of meeting federal expenditure and should ensure that each Government was in a position to finance the services for which it was responsible and to carry out its development plans. It would presumably provide for review from time to time by agreement in the light of experience.
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ANNEX X
(Para. 98 of Report)
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