CONFIDENTIAL
G VAN VAR Abundant M
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These percentage figures are very much higher than the corresponding U.K. figures of 3.2%, 13.1% and 16.0% for these years.
Question 2: I cannot see much sense in not raising government
loans, either locally or externally, to finance capital works, particularly if the returns from these works will be enough to
service the loans. Local borrowing could provide a stimulus and is unlikely, in present circumstances, to cause difficulties for
local private borrowing. However, the question of government
borrowing is rather academic unless very substantial increases in government expenditure are planned and/or taxes are to be reduced.
Apart from its external assets, the Hong Kong Government also has
over one billion dollars on deposit with local banks.
Question 3: The most risky step, in my view, would be to vary the
rates of tax on personal or corporate income. However, the revenues
-
with the present
are buoyant enough perhaps embarrassingly so
stable rates. There is also scope for raising revenue by reducing
the very high personal allowances as the Financial Secretary
pointed out in his last budget speech. The Government will also be compelled to step up motor taxation, regardless of revenue considera-
tions, in order to curb the rapid growth of private motoring in one
of the most congested areas in the world. There is also room for
government borrowing to cover any large increase in capital expendi-
ture, and this should be exploited before resorting to additional
taxation.
Question 6: My first preference would be to step up expenditure
on education (including technical training) as being the most pro-
ductive form of social investment in Hong Kong.
they already seem to be doing quite well :-
Percentagewise
1968/9
1969/70
1970/71
actual
rev. est.
budget
(1) Education expenditure
i
as % of total public
expenditure
14.9%
15.5%
(2) Increase over
previous years
9.9%
15.7%
16.0%
18.7%
This compares favourably with HMG's expenditure on education of 11-111% of total expenditure. However, this leaves several factors
out of account. In per capita terms, H. M. G's education expendi-
ture works out to about £40 per head, as compared with Hong Kong's
/ £6 to £7
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CONFIDENTIAL