WEDNESDAY, FEBRUARY 23, 1983
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+ IT IS ESSENTIAL TO ENCOURAGE INVESTMENT AND RE-INVESTMENT IN OUR BUSINESSES. I DO NOT THEREFORE INTEND TO INCREASE PROFITS TAX. I ALSO REGARD LOW PERSONAL TAXATION AS AN IMPORTANT FACTOR IN HONG KONG'S ECONOMY AND I AM PARTICULARLY UNWILLING TO ADD TO THE TAX NET THOSE MANY WORKERS IN HONG KONG WHO PAY NO TAX AT PRESENT, UNLESS THERE IS NO ACCEPTABLE ALTERNATIVE.
I DO NOT PROPOSE TO CHANGE SALARIES TAX EITHER.
CONSEQUENTLY
+ INTEND TO RAISE THE NECESSARY $3 BILLION LARGELY BY INDIRECT TAXATION, WHICH WILL OFTEN ALLOW A CHOICE BETWEEN SPENDING AND NOT SPENDING. IF THE INCREASED COST FOR EXAMPLE OF SMOKING, DRINKING, OR OWNING A MOTOR CAR SEEMS TOO GREAT, THEN IT NEED NOT BE UNDERTAKEN. NOR CAN BETTING BE REGARDED AS ESSENTIAL EXPENDITURE. IT ALSO SEEMS FAIR THAT THOSE WITH DISPOSABLE INCOME AVAILABLE FOR SUCH PURSUITS SHOULD BE ASKED TO FACE HIGHER TAXATION WHEN THERE IS A CLEAR NEED - AS NOW.
+I THUS HAVE MADE SEVERAL PROPOSALS FOR INCREASED TAXATION WHICH WILL INVOLVE BURDENS TO MANY. THEY MUST, HOWEVER, BE CARRIED
IN THE INTERESTS OF EVERYONE IN HONG KONG FOR THERE ARE NO EASY OPTIONS. AND TAXATION HERE WILL REMAIN LOW OVERALL.
+ I HAVE ALSO FOUND IT POSSIBLE TO PROPOSE TWO DECREASES AND ONE REFORM. I PROPOSE FIRSTLY TO ALLOW AS A PROFIT TAX DEDUCTION THE COST OF PURCHASE OF PATENTS, WHICH WILL HELP INDUSTRIALISTS= AND SECONDLY TO INCREASE THE DEPENDENT PARENT ALLOWANCE BY $2 000 FOR THOSE WHO ACCOMMODATE THEIR PARENTS IN THEIR OWN HOMES. THE REFORM MEASURE COVERS THE MUCH PUBLICISED PROBLEM OF SEPARATE TAXATION FOR WOMEN.
+WITH THESE CHANGES I BELIEVE THAT THE DEFICIT FOR 1983-84 WILL BE A MORE MANAGEABLE $3.2 BILLION. CLEARLY EVEN THIS WILL REQUIRE SOME BELT TIGHTENING, BUT YOUR GOVERNMENT WILL CONTINUE CALMLY AND STEADILY WITH AGREED PROGRAMMES. TOWARDS THE END OF THIS YEAR I SHALL BE CONSIDERING WITH MY ADVISERS WHETHER WE NEED TO RESORT TO BORROWING. AT PRESENT THE HONG KONG GOVERNMENT IS FORTUNATE IN HAVING ALMOST NO DEBT, AND ALL OF US WOULD PRIFER THIS SITUATION TO CONTINUE AS LONG AS POSSIBLE.
+1 NOW TURN TO WHERE OUR ECONOMY SEEMS LIKELY TO GO I 1983. WE ARE MUCH DEPENDENT ON THE STATE OF THE U.S. ECONOMY WHOSE EXPECTED UPTURN HAS BEEN LONG DELAYED. IF THE U.S. ECONOMY GROWS BY A CONSERVATIVE 2.5 PER CENT WE CAN EXPECT A REAL GROWTH IN HONG KONG OF FOUR PER CENT. OF COURSE IF THE AMERICAN RECOVERY
IS SHARPER, WE SHALL DO BETTER ALSO. I WAS TOO OPTIMISTIC LAST YEAR AND I DO NOT INTEND TO BE SO AGAIN. BUT IF THESE BROAD FIGURES ARE ACHIEVED REAL WAGES SHOULD RISE; THE RATE OF INFLATION FALL TO ABOUT NINE PER CENT; AND JOB OPPORTUNITIES IMPROVE.+
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