'File 35/87 VI A. 38 Muscat reforms, customs, finances' [‎27v] (62/440)

2
5. I attach for the information of the Government of India a copy of a
letter from the Financial Adviser together with its enclosure a statement
showing the actual revenue of Muscat State from 1st January 1923, to 30th
November 1923, together with the estimated revenue for December 1923.
This shows that there will be a deficit on this year's working of Rs. 1,05,272
in spite of expenditure being reduced to the lowest possible level I rather
fear that the improved Customs Revenue and the result of the above taxes
will hardly cover this deficit, and in any case will not be sufficient to place
Muscat State Finances on a sound footing.
6. It results from the above that it will be necessary either to increase
revenue permanently or reduce expenditure very considerably. The first can
only be done, as far as I can see, by raising the ad valvrem r&ie of customs
duty from 5 per cent, to 7^ per cent, or even 10 per cent. It will be remember
ed that when I was at Muscat in 1910 the late Sultan Sayyid Faisal denounc
ed the Commercial Treaty of 1891 simply with a view to getting the Customs
duty raised to 7^ per cent., and to do this is practically the only object to
revising the Treaty. The Customs revenue would of course be nearly doubled
if the rate were raised to 10 per cent, though perhaps not quite as volume of
import might be reduced. I very much doubt, however, whether it would be
suitable to raise the rate of duty in the manner suggested by Mr. Wingate,
without previous reference to France and America who have treaties with
Muscat which also fix rate of Customs duty at 5 per cent. This point, how
ever, is one for the Government of India or His Majesty's Government to
decide, I am not qualified to express any useful opinion on the subject.
7. In regard to reduction of expenditure the only thing I can suggest
is to reduce the Sultan's Privy Purse from Rs. 10,000 a month to 5,000
temporarily and with the proviso that the difference will be made good at
all events for the period H. H. is in Muscat if and when the State Finances
permit. The only other relief in expenditure which I can suggest is within
the power of the Government of India to accord and might take the form
ot—
{a) a remission of repayment of the loan or at all events a postpone
ment of the repayment of instalments for say 5 years; or
{h) a contribution to the cost of the Levy Corps; or
(c) an increase in the subsidy.
Of these I think (c) may be ruled out straight away. In favour of (h) it
may be urged that the institution of the Levy Corps has saved the Govern
ment of India the very large expenditure involved in keeping a regiment at
Muscat. On the whole, however, I consider {a) much the best course and
recommend it to the Government of India for favourable consideration.
8. If the Government of India are disposed to consider this proposi
tion favourably I beg to recommend—
(1) the deputation of Mr. Bower for 2| months to inspect Muscat
Customs and see if there is any method of increasing receipts;
(2) the introduction of the taxes mentioned yielding perhaps 1 rather
than less than \ a lakh One lakh is equal to one hundred thousand rupees per annum;
(3) the temporary reduction of the Sultan's civil list to 60,000 per
annum;
(4) the suspension by the Government of India of the repayment of
the loan for 5 years or till such time as the Muscat Finances
have been rehabilitated sufficiently to enable the State to con
tinue repayments of the loan.
It is possible that the measures suggested in Sections (1), (2) and (3)
above will result in sufficient increase of revenue and decrease of expendi
ture to enable the repayments of the loan to be reecommenced within
the next year or two.
9. In the meanwhile the Government of India and His Majesty's Gov
ernment will perhaps be pleased to consider the question of agreeing to an
increase of the rate of Customs Duty; this can be done in connection with
the Revision of the Commercial Treaty which has now been on the tapis*
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