6
in Hong Kong for the imposition of customs tariffs
and excise duties. Tariffs and duties imposed on imports
solely to protect Hong Kong industry from competition
in the domestic market can have no place in an economy
where specialisation of production and the growth of
domestic exports are essential for the expansion of
economic activity generally. Equally, in a highly trade-
oriented economy where virtually all raw materials and
capital goods are imported, attempts to raise revenue by
means of indirect taxes on imports could seriously
distort production costs and prices of manufactured.
goods and hence adversely affect Hong Kong's performance
in overseas markets. Even a wide range of levies on
consumer goods and foodstuffs would be detrimental to the
economy, principally because of their effect on consumer
welfare and the supply of effort.
11.
But let me just interpolate here that, despite
(and perhaps because of) a narrow tax base and low standard
rates of direct taxation, the rapid rate of growth of the
economy has helped ensure that tax yields have grown
rapidly. One of the most urgent tasks of the Hong Kong
Government in the early 1950's was to ensure that the
rapidly growing population was adequately housed and
provided with basic social and community services.
extremely ambitious programme of public expenditure had
to be mounted. In the last ten years alone (1963-64 to
1972-73) public expenditure on housing, education, health
and welfare services and other forms of social and
community services has been of the order of US$2,600 million
which represents some 60% of total public expenditure.
/Yet.....
An