domestic product. On the revenue side, some 30% of the total was derived from income taxes (compared with about 35% now) whilst excise duties on alcohol, tobacco and hydrocarbon oils accounted for around 15% (compared with about 10% now). The balance was largely derived from: fees and charges (20%); rates (10%); stamp duties (5%); and, of some importance, property income (15%). This last source of revenue is largely associated with the auctioning of leases on land all of which is held by the government and which is offered to the public, principally for industrial development, rather sparingly so as to keep the price relatively high. This arrangement not only produces substantial revenues but also ensures that scarce land is intensively utilised by highly profitable
industries.
15.
By 1971 Hong Kong's fiscal reserves had risen to HK$2,500 million (including the surplus on the Exchange Fund which holds the assets backing the banks' note issue and which maintains the exchange value of the Hong Kong dollar). Most of these reservos were held in the form of sterling (Hong Kong then being part of the Sterling Area) and this applied also to the foreign exchange holdings of the commercial banks. By 1971, net anouts due to Hong Kong's banks from banks abroad (excluding amounts in respect of Asia-dollar lending) were approaching HK$5,500 million (equivalent to some 35% of total deposit liabilities).
8
C(CONFIDENTIAL VAL