XN000022-1976-04-07 — Page 28

Wednesday, April 7, 1976

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WORKINGS OF H.K.'S FISCAL SYSTEM OUTLINED

The purpose of Hong Kong's fiscal system is to, generally speaking,

appropriate a suitable proportion of the community's resources for public

expenditure and not, in addition, to pursue social justice or to manipulate

the rate and pattern of economic growth.

The Financial Secretary, the Hon. Philip Haddon-Cave, said this

today in winding up the budget debate in the Legislative Council.

He stressed that the fiscal system should be as equitable as possible

as between different income groups and between different classes of taxpayers

or potential taxpayers.

"and it should rest as lightly as possible on the disposable incomes

of those at the lower end of the range of taxable incomes and possess a degree

of progressivity at the upper end.

"Finally, each and every levy be it direct or indirect should be

simple and easy (and, therefore, inexpensive) to administer."

He said the plain fact was that a fiscal system which was pitched as

low as possible so as to minimise its impact on the supply of human effort and

investment decisions could not afford to finance costly overheads.

of equity

"For this reason, in a low tax environment, not only is the pursuit

- or what my Honourable Friend Mr. Bremridge called 'absolute

fairness' for its own sake unnecessary; it is also not possible."

-

On the question of placing all the emphasis on direct taxation,

Mr. Haddon-Cave said: "It is only in the field of direct taxation where we

have any significant room for manoeuvre."

/He pointed