47.
If we were to move in the direction of a more broadly
based indirect tax, possibly in place of some of our existing
taxes, we would have to think the package through with
meticulous attention to the consequences that might follow. A
package that had a markedly adverse effect on the cost of living
and was moreover expensive and difficult to administer would not
be right for Hong Kong.
48.
I do no more this afternoon than raise this matter for
debate. I have as yet taken no hard and fast stand. I hope that I shall hear Members' views on the principles, if not the
mechanics. It does seem to me that a modest contribution from
as broadly based a sector of the community as possible is not
without its attractions if the prize to be gained is a stable
fiscal regime with lower direct taxes.
49.
For the moment, however, I propose to limit the renewed
upward drift of direct taxes as a proportion of
of the total tax
revenue by making adjustments within the existing system.
then
50.
When direct tax rates were increased in 1984, this step
was taken in the light of the budgetary situation
prevailing (14). There is now room to review the position. I emphasize that caution should be our guiding principle.
But
51.
Α number of existing indirect taxes and charges are
fixed in cash terms. These require regular review if their
yields in real terms are to be maintained. It is tempting in the face of a surplus to leave well alone. But I believe this
would be a serious mistake because in due course we would need
large increases to recover lost ground.
(14) 1984 Budget Speech, paragraph 128.
15
/52. The