XN000022-1971-02-24 — Page 15

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Wednesday, February 24, 1971

"1970/71 has indeed been very like 1962/63 in some respects. In

addition to substantial increases in recurrent revenue, largely under the

influence of an exceptional advance in economic activity, land sales played

a major role in raising total revenue in both years, about doubling to $208

million in 1962/63, and more than doubling to #258 million this year,"

Of the Salaries and Profits Tax, Sir John said the yield reflected

the results of the previous financial year, and it was clear that that year had

been economically even better than had been supposed. The estimate had been

revised upwards by $59 million to $749 million, a figure $126 million higher

than the actual yield in 1969-70.

Part of this increase continued to arise from the growth of salaries.

"When we introduced a new allowance this year to relieve from tax

anyone liable to pay less than $100, we hoped to reduce very substantially

the number of active salaries tax files. Instead, the number has gone up

by 9,000," Sir John said.

The yield of duties had also increased significantly, except for

tobacco, which was likely to have fallen slightly, due to a number of complex

reasons such as fluctuations in the timing of payment of drawback on exports,

and a transfer of consumption from imported to Hong Kong-manufactured cigarettes.

Sir John told the Council it was not possible to say what effect, it

any, the advance of medical knowledge of the dangers of tobacco smoking had had.

But he thought it could be said, with Hong Kong's relatively low rate

of duty, the Colony would not suffer such serious fiscal consequences as many

other communities were there to be, for any reason, a significant reduction

in smoking.

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