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WEDNESDAY, MARCH 24, 1976
HE EXPRESSED SATISFACTION THAT THE INDUSTRIAL ESTATE SCHEME WAS FINALLY BECOMING A REALITY AND HOPED THAT LOCAL INDUSTRIALISTS PLANNING TO SET UP SUPPORT INDUSTIRES WOULD ALSO RECEIVE THE FULLEST CONSIDERATION.
SPEAKING ON TAXATION POLICY, MR. WU BELIEVED THAT +SHORT OF ANY SERIOUS DOWN-TURN IN THE ECONOMY OF THE DEVELOPED NATIONS. WE WILL CONTINUE TO BE ABLE TO FINANCE THE SOCIAL SERVICES INTENDED WITH REVENUE ENCHANCED BY OUR CONTINUING ECONOMIC GROWTH UNDER THE PRESENT TAX SYSTEM AND WITH MOBILISATION OF RESOURCES IN PRIVATE SECTOR FROM WITHIN AND WITHOUT, GIVING THE CONFIDENCE IN OUR VIABILITY AND STABILITY,
+1 DO AGREE HOWEVER THAT WAYS AND MEANS SHOULD BE DEVISED TO TAX NON-RESIDENT CORPORATIONS WHICH BENEFIT FROM HONG KONG'S INFRASTRUCTURE AND PUBLIC SERVICES, AND TO COUNTER ACCUSATION OF BEING A TAX HAVEN, BUT NOT AT THE EXPENSE OF A WELL-TRIED AND MIRACULOUSLY SUCCESSFUL TAX-SYSTEM, WHICH, HOWEVER OUTDATED, IS STILL THE ENVY OF MANY PEOPLE AND GOVERNMENTS,+ HE SAID.
UNOFFICIAL MEMBERS AS WELL AS THE MAJOR TRADE AND INDUSTRIAL ORGANISATIONS, HE SAID, OBJECTED STRONGLY TO THE FINANCIAL SECRETARY'S PROPOSAL TO INTRODUCE A DIVIDEND WITHHOLDING TAX AND AN UNDISTRIBUTED PROFITS TAX BECAUSE IT INVOLVED DOUBLE TAXATION WHICH WAS UNFAIR TO SMALL SHAREHOLDERS- IT CONSTITUTED A RADICAL CHANGE IN HONG KONG'S SIMPLE TAX STRUCTURE AND WOULD DISCOURAGE NEW INVESTMENT IT WOULD INTERFERE WITH PROPER FINANCIAL MANAGEMENT IN DETERRING RE-INVESTMENT AND IT WAS NOT IN LINE WITH THE WELL KNOWN STRATEGY OF LIMITING DIVIDEND PAYMENTS AND WAGE INCREASES TO FIGHT INFLATION.
+IN GENERAL, TAXES THAT BEAR ON SAVINGS AND RETURNS ON INVESTMENT WILL DISCOURAGE GROWTH COMPARED TO TAXES THAT FALL ON CONSUMPTION, HE SAID. +ALSO, LOW TAXES THAT DO NOT DETER OR REDUCE THE INCENTIVE TO LONGER AND HARDER WORK, VENTURE INVESTMENT AND FORMATION OF RISK CAPITAL, DO STIMULATE RAPID ECONOMIC GROWTH, AS IS THE CASE IN HONG KONG WHERE WE PLACE THESE CONSIDERATIONS UPPERMOST.+
HE SAID IT WAS UNFORTUNATE THAT SUCH CONSIDERATIONS CONFLICTED WITH COMMONLY HELD IDEAS OF WHAT IS AN EQUITABLE TAX STRUCTURE. MANY WELL-MEANING AND IDEALISTIC PEOPLE THEN WENT FOR TAX SYSTEMS THAT TENDED TO EMPHASISE ON DISTRIBUTION RATHER THAN ON THE PRODUCTION OF WEALTH.
+ IN THE PROCESS ONCE GREAT NATIONS BEGIN TO GO DOWN-HILL AND STRONG INDUSTRIAL ECONOMIES BECOME RUINS. POOR NATIONS BECOME POORER. ALL BECAUSE OF THE LACK OF DIRECTION AND MOTIVATION FOR PRODUCTIVE LABOUR AND CAPITAL INVESTMENT, PLUS THE COSTLY PROVISION OF EASY-GOING SOCIAL BENEFITS THAT ARE OPEN TO ABUSE.+
MR. WU STRESSED THAT HONG KONG, WITH NO ENDOWMENT OF NATURAL RESOURCES BUT ONLY WITH INDUSTRIOUS LABOUR AND RISK CAPITAL, COULD LEAST AFFORD TO TREAD ON SUCH A TREACHEROUS ROAD.
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