No. 46

With reference to the intimation conveyed to me, in your
Despatch No 1 of the 12th July, of the intention of Her
Majesty's Government to repurchase Vancouvers Island, I would be
very thankful to your Grace for definite instructions in this
matter, for I am placed in a situation of extreme embarrassment,
owing to the refusal of the agent of the Hudsons Bay Co, to
make further advances to meet the cost of the Civil
Establishment, in consequence, as he states, of advices from
home to that effect, while so far as I am aware the Charter of
Grant has not yet been determined.

2. The present sources of Revenue are as follows

Licences for the Sale of Liquors

Sale of Public Lands

Harbour dues

3. The Revenue arising from the Licences of 1859 has been voted
by the Legislature to making streets and roads, and the proceeds
of the Harbour dues, but little more than pay the Harbour
Expenses.

4. I have therefore nothing to depend upon at present to meet
the Civil Expenditure of the Colony, except the funds arising
from the sale of Public Lands, and as the House of Assembly have
no control over that source of Revenue, they have in consequence
steadily declined to impose Taxes on the Inhabitants of the Colony.

5. This I considered a matter of little moment so long as the
population was small and the poverty of all classes extreme, as
under such circumstances, no sufficient Revenue could be raised
in the Colony.

6. But with the increase of population and wealth, circumstances
have greatly improved since last year, and I am of opinion that
a considerable Revenue may now be raised in the Colony.

7. I have therefore brought in a measure to enlarge the
Representation by the addition of 6 new Members, making in all
13 members for the House of Assembly, and when that Bill passes
the House, it will be dissolved, and a new election called.

8. I propose to lay before the New House a scheme of direct
taxation, levied on property, trades, professions, and other
sources, which it is calculated will produce a Revenue that will
enable the Colony to defray all the Civil expenditure in a fit
and becoming manner.

9. I have proposed a system of direct taxation in preference to
levying a duty on Customs, in consequence of the former being
more in harmony with the wishes of the Colonists, and consistent
with our former policy of making Victoria a free Port.

10. Until these measures are matured there is no Revenue to
meet current expenses, except the proceeds of Land Sales, and as
they may prove insufficient to defray the unavoidable
expenditure of the Colony, I beg that Your Grace will instruct
me as to how that expenditure is to be provided for under
existing circumstances.