125.8571/8–449: Telegram
The Consul at Shanghai (McConaughy) to the Secretary of State
[Received August 5—2:24 a. m.]
3039. ReConGentel 2895, July 22, repeated Nanking 1627, house tax on Government-owned buildings Shanghai. Bureau Finance has rejected any request for exemption US Government owned property [Page 1267] from tax. Bureau stated request was inconsistent with provisional measures for collection house tax for months May and June promulgated by Municipal Government. Discovered that through clerical error resulting misplacement decimal point total bill May and June only one-tenth amount previously reported. Correct amount is PN44 2,277,000, equivalent US dollars 1,035. Assessment for several Government-owned properties here not yet received.
Although amount involved much less than previously indicated, it is still substantial. Further increase later date is quite possible. If we concede our liability to this tax, it would pave way for later Communist expropriation property without compensation. This purpose would easily be accomplished by tax increases.
Understand Chinese and foreign real estate boards protesting both house taxes and land taxes on valuable properties asserting in many cases owners literally unable to pay. American School has received retroactive land tax bill equivalent US $276,600 covering 3 years 1947–49.
Although we may be forced out of some or all our property here if we refuse to pay, I believe risk will have to be run in order maintain vital principles involved. I doubt if Communists will actually evict us from our properties unless they intend eject US in any case from occupied China. Hence it may well be we have nothing to lose by standing firm. We have better case for exemption from real property taxes [than] from vehicle taxes. Latter paid this week.
While it is a temptation to pay the rather small tax on principal officer’s residence on Route Delastre (only US $18) in order to tighten our hold on the property which may be challenged, I believe on principle we must refuse to pay this assessment also.
If same taxation principle being applied our properties in all areas Communist China, representations Peiping covering all cases might serve useful purpose.
Sent Department, repeated Nanking 1690.
- People’s Notes (Chinese Communist currency).↩