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WEDNESDAY, MARCH 18, 1987
HE STRESSED THAT INDIRECT TAXATION DID HAVE THE ADVANTAGE OF PRESERVING INDIVIDUAL BASIC RIGHT OF CHOICE AND THAT AN UNDULY HIGH RATE OF DIRECT TAXATION WOULD NOT BE CONDUCIVE TO PROMOTING INCENTIVES.
ON BALANCE, MR WONG SAID HE WAS IN FAVOUR OF WIDENING THE TAX BASE BUT WARNED THAT CAUTION SHOULD BE EXERCISED IN EXTENDING THE RANGE OF INDIRECT TAXES.
+MODERN TAX SYSTEMS ARE ESSENTIALLY A COMPROMISE. OUR QUEST IS TO FIND THE RIGHT COMPROMISE IN THE CONTEXT OF HONG KONG, HE SAID.
PROS AND CONS OF INDIRECT TAXATION EXAMINED
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DR THE HON HO KAM-FAI TODAY (WEDNESDAY) EXAMINED IN DETAIL THE PROS AND CONS OF INDIRECT TAXATION DURING THE BUDGET DEBATE IN THE LEGISLATIVE COUNCIL.
DR HO SAID HE COULD SEE SOME MERITS IN WIDENING THE SCOPE OF INDIRECT TAXATION, SO LONG AS THE GENERAL TAXATION GUIDELINES LAID DOWN BY PREVIOUS FINANCIAL SECRETARIES WERE BEING OBSERVED.
+UNDER THESE CIRCUMSTANCES, INDIRECT TAXES ARE COMPLEMENTARY TO, BUT NOT REPLACING, DIRECT TAXES IN REVENUE RAISING, THE SAME BURDEN OF INDIRECT TAXES IS MERELY SPREAD MORE WIDELY ACROSS DIFFERENT SEGMENTS OF THE SOCIETY, HE SAID.
HOWEVER, THERE WERE GENUINE FEARS THAT THE GOVERNMENT WOULD HAVE FEW ALTERNATIVES BUT TO ALLOW INDIRECT TAXATION TO SLIP INTO THE ROLE OF A MAJOR INSTRUMENT OF REVENUE RAISING IN THE FACE OF A LESS THAN SATISFACTORY EXPORT PERFORMANCE OR UNDER THE CONSTANT PRESSURE OF RISING SOCIAL ASPIRATIONS AND WELFARE, DR HO NOTED.
HE SAID INDIRECT TAXATION TOTALLY DISREGARDED THE ABILITY TO PAY AS TAXES WERE LEVIED AT THE SAME RATE UPON CONSUMPTION, IRRESPECTIVE OF THE INCOME LEVEL OF THE CONSUMER.
+THIS TYPE OF TAXATION IS THEREFORE CONSIDERED TO RUN COUNTER TO THE PRINCIPLE OF SOCIAL EQUITY, HE SAID.
ALTHOUGH THE HONG KONG GOVERNMENT WAS ORIENTED TOWARDS A MERCANTILE ECONOMY, IT HAD, NEVERTHELESS, IN THE LAST DECADE TAKEN ON THE FUNCTIONS OF A CARING AND BENEVOLENT GOVERNMENT.
/+THESE POSITIVE