16
So am I if it can be avoided and I am on public record as
saying this. And I repeat that I am very conscious of the
overriding need to maintain a high growth rate of our economy and I can assure honourable Members that I understand
the role of fiscal policy in helping to achieve this.
Nevertheless, the incidence of direct taxation in Hong Kong
remains low relative to other countries. I have already
demonstrated how favourably Hong Kong stands in relation to
other countries and territories in the profits tax league
table. The same applies, incidentally, to personal tax. (A married man with two children would pay 1.5% of his $3,000 monthly salary in salaries tax in Hong Kong compared with 16% of his income in Britain, 10% in Australia and 8% in
Singapore. If he were earning $7,500, the percentages would be 13% compared with 26%, 27% and 20%).
40.
I fear some increase in the standard rate of earnings and profits tax is inevitable unless the economy takes off at an unprecedented rate, for the other elements in the package are unlikely to be sufficient to meet our needs and there are considerations relating to the balance of the fiscal system
which are very important. In this connection, I would refer
honourable Members to the guidelines I laid down in paragraphs
57 to 59 of my budget speech.
41.
Equally we must not delude ourselves into believing that tighter control over expenditure will make more than a marginal contribution. It is policy which really determines the level of public expenditure, not extravagant standards, though I fervently believe in modest standards, adherence to conventional rules and cost-efficiency and I am grateful to my honourable Friends Mr. P.C. Woo and Mr. James Wu for saying, in effect, that the Finance Committee of this Council will assist the Finance Branch and heads of departments in achieving this and dampening down the flow of applications for supplementary provision during the course of a financial year.
42. I have just said that it is policy which determines the level of public expenditure: that is to say, objectives and the speed at which those objectives are to be achieved, having regard to available resources and the inter-relationship between the public and private sectors. The 1-3-10 concept
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