The Ambassador in Great Britain (Bingham) to the Acting Secretary of State

No. 35

Sir: I have the honor to acknowledge the receipt of the Department’s instruction No. 520, dated May 23, 1933, enclosing a copy of a letter, dated May 6, 1933, from the Treasury Department, with regard to the assessment of the British tax on the private incomes of American consular officers. The Embassy’s attention was directed to the fourth paragraph of the Treasury Department’s letter, which outlines the treatment accorded foreign consular officers in the United States, and I have noted the suggestion that if the policy of the Treasury Department were made clear to the Foreign Office, the British Government might be disposed to adopt a more liberal treatment of American consular officers in respect of the taxation of private incomes.

The suggestion, that the Foreign Office does not appreciate the nature of the favorable treatment accorded British, as well as other consular, officers in the United States, would appear to be based on some misunderstanding. The Embassy has repeatedly brought the matter of privileges enjoyed by British diplomatic and consular officers in the United States to the notice of the Foreign Office, sometimes orally in connection with the taxation of motor cars owned by American diplomatic officers, and on other occasions by official note. With particular regard to the subject of the present despatch, the Embassy informed the Foreign Office, in accordance with the Department’s instruction No. 147, July 28, 1932,34 that:

“… consular officers in British consulates in the United States are accorded a status of non-resident aliens and as such are subject to income tax only on income (other than official salaries and fees) derived from sources within the United States.

“… it is believed that as a matter of comity and reciprocal treatment, consular officers of both countries should be regarded as entitled to be accorded privileges and exemptions not given to non-privileged individuals.”

The Foreign Office replied on March 11, 1933, (see enclosure No. 1, [Page 34] despatch No. 747, March 21, 1933) that the exemption accorded in respect of the official emoluments of foreign consular officers derives from an Act of Parliament, and that

“His Majesty’s Government regret that they are unable 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.”

In short, the position of the British Government is apparently that it cannot enter into an agreement reciprocally to grant exemption by administrative acts, and that it will not seek any amendment in the law to permit of the granting of such exemption.

This understanding has been clearly confirmed by members of the Foreign Office, who, when reminded in conversation of the privileges in the matter of certain taxes accorded British diplomatic and consular officers in the United States, invariably affect to show much appreciation of the courtesies extended, but add that they are purely voluntary acts on the part of the American authorities and impose no obligation upon the British Government to reciprocate.

Respectfully yours,

For the Ambassador:
Ray Atherton

Counselor of Embassy
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