Translation
Press Cutting from Hong Kong Economic Journal of 24.3.80
WHY DOES BRITAIN DISCRIMINATE AGAINST CPA?
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After 5 months of consideration, the British Civil Aviation Authority at last decided to approve the British Caledculan Airways to operate on the Hong Kong-London air route. It is natural that the Hong Kong-based Cathay Pacific Airways, whose application was turned down, was much dissatisfied. The executive director of CPA, Mr. Duncan Bluck, told our reporter on Tuesday that he was "surprised and disappointed." He said, "Britain is taking advantage of her constitutional privilege to set up two UK-based airline companies in Hong Kong. This is extremely unfair so far as the interests of Hong Kong are concerned."
How should we view the matter? A better way is to study why the British government refused to approve a Hong Kong-based airline company to compete on the Hong Kong-London air route. Here are our views?-
(1) There is a great difference between the profit tax rates of
Hong Kong and Britain. If a UK-registered corpany and a Hong Kong-registered company operate the same business, the latter will certainly be in a better position because it can provide better services (e.g. by lowering the fares directly or indirectly) by taking advantage of the lower tax rate, thus defeating the former in the competition.
(2)
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the
If, for this reason, the UK-registered company slashes its profits, or even runs its business at a loss, the British government will definitely receive a smaller amount of tax. On the other hand, the government will certainly come under attack from people in the commercial circles government created unfair competition, thus making a company of the country suffer losses and a colonial company gain profits. The British government, being circumspect and farsighted, will certainly try to prevent this situation from emerging.
/(3) We