894.52/47: Telegram
The Chargé in Japan (Dickover) to the Secretary of State
Tokyo, November 11, 1936—4
p.m.
[Received November 11—7:33 a.m.]
[Received November 11—7:33 a.m.]
230. Department’s 138, November 3, 3 p.m.
- 1.
- Third principle of the British proposal contemplated exemption from all land and house taxes and the national income tax, but not the prefectural and municipal surtaxes on the national income tax.
- 2.
- Before submitting the Department’s proposal to the Japanese Government I again discussed the leasehold question with the British Embassy and learned that that Embassy has recently received a reply from the Japanese Government to its proposal (Embassy’s despatch No. 2067, October 2, 193635). The reply states that the perpetual leaseholds constitute an anachronism and cause unequal burdens of taxation upon the Japanese and foreign residents of the municipalities, and that the solution of the problem cannot wait for the expiration of the 99 year period proposed by the British but must be found in the very near future. The Japanese note then makes a counterproposal, as follows: (a) The leases to be canceled and ownership rights substituted therefor in April of next year, (b) as an act of grace the leaseholders to be exempted from payment of the national land tax for a period of 5 years from the date of cancellation of the leases. The note ends with a statement to the effect that if this proposal is not accepted the Japanese Government will take steps to collect arrears taxes from the leaseholders and will take suitable measures to equalize the burden of taxes in the future (it is presumed that this last refers to unilateral cancellation of the leases by the Japanese Government or to the collection by force of all taxes from the leaseholders in the future in disregard of the terms of the leases).
- 3.
- The British Embassy has referred the Japanese note to its Foreign Office and to the British leaseholders committees of Yokohama and Kobe, with the request that it be kept confidential for the present.
- 4.
- In view of the Japanese reply to the British proposal, I shall not take the action indicated in paragraph 2 of the Department’s 138 pending the receipt of further information. It is suggested that action be delayed until the attitude of the British leaseholders is ascertained, when the situation will be more nearly clarified. Expression of opinion from the British leaseholders expected in 1 or 2 weeks. Department will be informed.36
Dickover