702.0641/73
The Chargé in Great Britain (Atherton) to the Secretary of
State
No. 747
London, March 21,
1933.
[Received March 30.]
Sir: I have the honor to refer to the
Department’s instruction No. 147, dated July 28, 1932,30 directing me to inform the
Foreign Office of the views of the American Government with regard
to the taxation of the
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private incomes of American Consular officers in Great Britain and
to express the hope that an exemption would be accorded to American
officers with respect to income derived from sources outside Great
Britain.
The substance of this instruction was conveyed to the Foreign Office
by an official note as well as orally in the course of a
conversation which a member of the Embassy staff had with the
responsible officer in the Foreign Office on September 12, 1932. I
now have the honor to enclose a copy of a note, dated March 11,
1933, which has been received from the Foreign Office.
It will be noted that the British Government expresses its inability
to grant “foreign consular officers wider exemption than the Act
(Finance Act, 1930) accords to them where income tax is
concerned”.
The argument that American Consular officers should be accorded
exemption on the basis of reciprocity has apparently had no weight
with the British Government; for in a private letter which I have
received from the responsible officer in the Foreign Office
statement was made that “we cannot claim for our consuls in the
United States privileges which we are unable to concede to your
consuls in this country”.
I do not feel that the negotiations on this particular matter are at
an end, nor do I believe that all possible arguments in favor of
granting exemption have been exhausted. It is my impression that
discussions can be protracted for some considerable period of time,
at the end of which the British authorities might be disposed to
take a more generous view. If it should meet with the Department’s
approval, I shall give the Foreign Office to understand that this
Government does not consider the matter to be closed and desires to
continue the discussions.
Respectfully yours,
[Enclosure]
The British Secretary of State for Foreign
Affairs (Simon) to the
American Ambassador (Mellon)
No. T 2692/224/373
[London,] 11 March,
1933.
Your Excellency: I have the honor to
inform you that His Majesty’s Government have given careful
consideration to the representations made by Mr. Atherton in his
note No. 197 of the 12th August last concerning the treatment of
United States consular officers in this country in the matter of
income tax on their private incomes as distinct from their
official emoluments.
- 2.
- As Your Excellency is doubtless aware, the exemption
enjoyed by foreign consular officers in this country from
payment of income tax in respect of their official
emoluments is secured to them by the provisions
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of Section 20 of the
Finance Act, 1930, which gave legality to a practice of over
eighty years standing. During that period the view was
consistently maintained that a relief confined to official
emoluments was appropriate to foreign consular officers.
That view, which formed the subject of careful deliberation
before the enactment of the Statute referred to, may be said
to have been endorsed by the legislature through the passing
of the Act, and His Majesty’s Government regret that they
are not able to contemplate any further amendment of the law
in the direction of granting to foreign consular officers
wider exemption than the Act accords to them where income
tax is concerned.
- 3.
- In Mr. Atherton’s note under reply it was suggested that
the practical effect of charging British income tax on the
private incomes of United States consular officers would be
to limit appointments in Great Britain to those officers who
happen to be without independent income. This suggestion is
one which His Majesty’s Government find it difficult to
appreciate, and they feel that it may be due to some
misunderstanding on the part of the United States Government
as to the amount of tax payable in these cases. In the
semi-official correspondence which passed between the
Embassy and this Office in regard to this question in 1930
it was pointed out that a consular officer’s official income
is not merely exempt from income tax but is entirely
disregarded in determining the amount of his income for
taxation purposes, with the result that he enjoys the full
benefit of ordinary personal reliefs against his private
income. This means that at the present time he does not pay
income tax unless his private income exceeds £100 if he is
unmarried, £150 if he is married, and a considerably larger
sum if he has children, while the first £175 of any excess
income is liable at only half the standard rate of
tax.
I have [etc.]
(For the Secretary of State)
G. R. Warner
