WEDNESDAY, FEBRUARY 25, 1987
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+IF OUR REVENUE IS OVERLY DEPENDENT ON NARROWLY BASED DIRECT TAXES, THEN IT IS ALL TOO EASY IN DIFFICULT TIMES TO BE FORCED INTO A POSITION WHERE ONE HAS TO INCREASE THOSE DIRECT TAXES SIGNIFICANTLY IN ORDER TO PROVIDE FOR COMMITTED RECURRENT EXPENDITURE.+
TURNING TO TAXATION, MR JACOBS SAID AS BOTH THE ECONOMY AND GOVERNMENT SERVICES GREW, THE STABILITY OF PUBLIC FINANCES COULD BEST BE ASSURED BY ENDEAVOURING TO DEVELOP A BROADLY BASED TAX SYSTEM + BECAUSE SUCH A SYSTEM IS MORE RESILIENT♦,
+1 AM NOT SUGGESTING A CASE FOR HIGHER OVERALL TAXATION, SIMPLY A WAY OF SPREADING THE TAX DURDEN MORE WIDELY ACROSS OUR COMMUNITY,+ HE NOTED.
+WE MUST BE PRACTICAL IN OUR APPROACH. WE DO NOT WANT COMPLEX NEW TAXES. NEITHER DO WE WANT TAXES THAT ARE COSTLY TO ADMINISTER OR DAMAGE INCENTIVE. WE HAVE DONE VERY WELL WITHOUT THEM. +
MR JACOBS SAID ONE WAY OF ACHIEVING A BROADER TAX BASE WAS THROUGH WIDENING THE SCOPE OF INDIRECT TAXES WHICH THE GOVERNMENT CURRENTLY LIMITED TO A RELATIVELY SMALL NUMBER OF SPECIFIC ITEMS.
AN EXAMPLE WAS AN EVENTUAL WIDENING OF THE SALARIES TAX NET, HE SAID.
MR JACOBS SAID IF THE GOVERNMENT WERE TO MOVE IN THE DIRECTION OF A MORE BROADLY BASED INDIRECT TAX, POSSIBLY IN PLACE OF SOME OF EXISTING TAXES, IT 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,+ HE NOTED.
+FOR THE MOMENT, HOWEVER, I PROPOSE TO LIMIT THE RENEWED UPWARD DRIFT OF DIRECT TAXES AS A PROPORTION OF THE TOTAL TAX REVENUE BY MAKING ADJUSTMENT WITHIN THE EXISTING SYSTEM,+ NE ADDED.
ON INDIRECT TAXATION, MR JACOBS SAID A NUMBER OF THESE TAXES AND CHARGES WERE FIXED IN CASH TERMS, AND THESE REQUIRED REGULAR REVIEW IF THEIR YIELDS IN REAL TERMS WERE TO BE MAINTAINED.
SUMMING UP, MR JACOBS SAID THE FORECAST INDICATED AN AVERAGE ANNUAL SURPLUS ÖVER THE REMAINDER OF THE FORECAST PERIOD OF CONSOLIDATED REVENUE OVER EXPENDITURE OF SOME $1.5 BILLION PER ANNUM.
+1 REGARD THIS AS NO MORE THAN A REASONABLE CUSHION, WHICH MUST BE SEEN IN THE LIGHT OF AN AGGREGATE OF CONSOLIDATED REVENUE AND EXPENDITURE EXCEEDING $100 BILLION IN EACH YEAR.
+CLEARLY, RELATIVELY SMALL PERCENTAGE CHANGES IN EITHER REVENUE OR EXPENDITURE COULD HAVE A MAJOR IMPACT ON THE RESIDUAL SURPLUS,+ HE ADDED.
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