CONFIDENTIAL
Descriptive Note No. 15
VISIT OF THE SECRETARY OF STATE TO HONG KONG
APRIL 1970
HONG KONG ECONOMY
Finance
Hong Kong receives virtually no financial aid from Her
Majesty's Government. Since the end of the last war, with one
or two exceptions, it has run a substantial surplus on the
recurrent budget, from which it has financed its own development
expenditure, which has been on a massive scale. The housing
programme in particular has been an outstanding success, and has
been carried through entirely from local resources. Aid from the
United Kingdom has been limited to grants towards higher educatior
projects (the two universities and technical education) and a loan
and grants for the development of Kai Tak airport. It is a sore
point in Hong Kong that since 1945 we have not felt able to make
1egular aid allocations to the Colony. Our reason is that they
are able to manage without; if they run short of development
finance, our general attitude has been that they should raise local
loans (the public debt is very low) or increase taxation. But since
we provide no aid, we cannot exercise control over their financial
policies; the ultimate responsibility of the Secretary of State is
in practice purely formal, and they are to all intents and purposes
financially autonomous.
The
2. Fiscal policy is in fact a matter of some controversy.
standard rate of tax on earnings and profits was for many years
maintained at the low rate of 12% (though the rate is doubled in
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CONFIDENTIAL