WEDNESDAY, MARCH 30, 1994
THE
SIR HAMISH SAID:
*
"THAT SAID, I DO ACCEPT THAT WHEREVER POSSIBLE WE SHOULD TIF BALANCE IN FAVOUR OF RELIABLE, STEADY SOURCES THAT IS ANOTHER REASON WHY I FAVOUR KEEPING RATES UP WITH INFLATION, AND WHY I HAVE GONE FOR AN INCREASE IN THE BUSINESS REGISTRATION FEE. THEY ARE RELATIVELY STEADY, RELIABLE SOURCES OF REVENUE.
BOTH
SIR HAMISH SAID WHATEVER HE PROPOSED TO RAJSE IN TAX, HE BE ABLE TO JUSTIFY IN TERMS OF NEED.
MUST
"WK HAVE RESERVES WHICH WILL SUSTAIN GROWTH IN EXPENDITURE IN LINE WITH THE PROJECTED GROWTH IN THE ECONOMY.
IN FACT, THE RESERVES ARE MORE THAN ENOUGH FOR THAT: THEY ALSO EXTEND ΤΟ PROVIDING AN ASSURANCE THAT HONG KONG CAN SURVIVE QUITE CONSIDERABLE SHOCKS то THE ECONOMY WITHOUT HAVING TO CUT BACK ON EXISTING EXPENDITURE.
"BUT I CAN'T JUSTIFY GOING BEYOND THAT. AT SOME POINT, I TO SAY *WE HAVE ENOUGH TAX FOR NOW, THANK YOU' HE SAID.
HAVE
FI
J
HE SAID THE REVENUE BASE AND THE TAX NET WERE NOT THE SAME.
THE REVENUE BASE IS THE OVERALL MIX OF ALL SOURCES OF REVENUE.
"WE WISH TO KEEP IT STABLE, SIMPLE AND PRODUCTIVE. NET, ON THE OTHER HAND, REFERS TO THE NUMBER OF TAX-PAYERS.
THE TAX
"THE NUMBER OF PEOPLE IN THE TAX NET CAN BE REDUCED WITHOUT NECESSARILY AFFECTING THE REVENUE BASE, BECAUSE AT A TIME OF ECONOMIC GROWTH AND OF RISING REAL WAGES WE CAN STILL EXPECT TO MAINTAIN REVENUE DESPITE OUR CONCESSIONS ON SALARIES TAX."
FOR EXAMPLE, REVENUE FROM SALARIES TAX IS EXPECTED TO IN 1994/95, AND WILL CONSTITUTE ABOUT THE SAME PROPORTION REVENUE AS IT DID IN 1993/94.
INCREASE
OF TOTAL
"THUS, I DON'T THINK IT IS QUITE ACCURATE TO ARGUE THAT BY REDUCING THE NUMBER OF TAX-PAYERS IN THE NET, I AM NARROWING THE REVENUE BASE."
"1 WOULD ONLY NARROW THE REVENUE BASE IF I SEVERELY REDUCED THE NUMBER OF SOURCES OF REVENUE, OR LET THE REVENUE FROM THE EXISTING ONES ATROPHY IN REAL TERMS BY FAILING TO KEEP THEM UP-TO-DATE.
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"THIS IS WHY 1 ATTACH IMPORTANCE ΤΟ MAINTAINING FEES AND CHARGES IN LINE WITH INFLATION, AND TO MAINTAINING RATEABLE VALUES IN LINE WITH THE MOVEMENT IN RENTAL VALUES.
BUT IT WOULD STILL BE A VALID CRITICISM IF IT COULD BE SHOWN THAT THE TAX CHANGES HAVE MADE THE REVENUE SIGNIFICANTLY LESS RELIABLE, AND MORE VOLATILE.
THIS POINT IS SOMETIMES TREATED AS IF IT 18 THE SAME THING THE RATIO BETWEEN DIRECT AND INDIRECT TAXES.
AS
/INDEED, THIS