Registry
No.
SECURITY CLASSIFICATION
-Top Secret,
Secret
Confidential.
Restricted
Unclassified,
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.............In Confidence
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To:-
CONFIDENTTAL UK EYES A
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Type 1 +
From
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Telephone No. Ext.
Department
BACKGROUND NOTES ON HONG KONG GOVERNMENT (HKG) ECONOMIC POLICIES
TAX POLICY
1.
1
Attached is Graph 1, which shows just how (non) progressive
Hong Kong's direct tax system is. I do not yet know how old
it is, but for the small sections I have been able to check
it seems up-to-date (ie incorporating the tax changes in the
1977 Budget there were none this year).
POLICY DEFINITIONS AND STATISTICS
2.
Government Expenditure. Although we have figures for net consolidated account expenditure next year, they include
substantial transfers of reserves which are not likely to be
completely spent and do not include all government-guaranteed
expenditure such as the Mass Transit Railway, which is
included as public expenditure in 'Estimates of GDP'. Too
much analysis in the Budget was spent on the General Revenue
account, rather than the overall net Consolidated account.
Government Revenue and Fiscal Surpluses. Richard Herd
has drawn my attention to the fact that several items that
are currently included as 'Government Revenue' (in the General Revenue and Consolidated accounts) do not really constitute
'leakages' out of private sector flows and into the public
sector, but are rather, simply, ways of augmenting fiscal assets
at no net cost to the private sector.
For economic purposes
3.
G
we might consider looking at Government Revenue net of (capital
account) land sales and loans there is, after all, very little
difference between the Hong Kong Government selling building land and the British Government selling BP shares or Government
bonds; all three are ways of realizing government assets, but
at no net expense to the private sector, which, in buying
these assets, is merely exchanging very liquid assets for les6
liquid. Admittedly, when the HKG sells land much of the land
is leasehold and so can be 'sold' again by some future
CONFIDENTIAL,
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