6.
govment's accruals was generally placed abroad (in practice,
until recently,
in London, Hong Kong being part of the Sterling Area).
(g) The Budget
The
13. But these budget surpluses were largely unplanned.
government has, in fact, generally aimed to balance the budget
and this has been consistent with its non-interventionist econo-
mic philosophy. It inherited from the pre-war administration a low standard rate of direct taxation (confined to a narrow tax base), an almost total absence of excise duties (according with Hong Kong's free-port status) and relatively low scales of fees
and charges generally. Yet without radically altering this low
tax structure the government found, year after year, that it
was more than able to finance even the most ambitious of its expenditure programmes (these being necessitated by the mounting
social pressures emanating from the rapid growth of the popula- tion). The almost paradoxical persistence of budget surpluses throughout the 1950's and the 1960's (the fiscal years 1959/60
and 1965/66 excepted, the standard rate of income tax being
raised in these years, as a result of the deficits, from 10% to 12% and from 121% to its present 15% respectively) was largely
a consequence of the extraordinarily rapid growth of the economy
but, to an extent, it was also on account of improvements in the
efficiency of the revenue collecting machinery.
35%
14. During the 1960's, a high proportion (40) of the govern-
ment's expenditure was devoted to housing and social services
(though with the vikia naw in excess of 40%). (including education) and this continues to be the case Housing
expenditure increased, in current terms, by over 200% to HK$220 million for 1971/72, whilst spending on social services
and education increased by more than 250% to HK 970 million.
Total government expenditure, at nearly HK 3,000 million, was
equivalent, at this time, to about 15% of the gross domestic product. On the revenue side, some 30% of the total was derived from income taxes (compared with about 35% now) whilst excise
dution on alcohol, tobacco and hydrocarbon oils accounted for around 15% (compared with about 10% now). The balance was largely dorived from: foos and chargos (20%); ratos (10%); stamp duties (56); and, of some importance, property income (15%).
This last source of revenue is largely associated with the auc-
tioning of leases on land all of which is held by the government and which is offered to the public, principally for industrial /development,
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56 D073528 200M 2/74 Cr.P.C. $3973
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