XN000022-1983-03-23 — Page 17

WEDNESDAY, MARCH 23, 1983

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INDIRECT TAX PROPOSALS CALLED 'DRASTIC'

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SOME OF THE INDIRECT TAX PROPOSALS INCORPORATED IN THE BUDGET WERE DESCRIBED AS +DRASTIC MEASURES+ BY DR THE HON RAYSON HUANG,

+ INCREASES OF OVER 50 PER CENT AND IN SOME CASES AS HIGH AS 300 PER CENT DEFY THE DESCRIPTION OF MODERATE, PARTICULARLY WHEN THEIR MAIN IMPACT WILL BE ON THE SANDWICH CLASS, + HE SAID, AT THE LEGISLATIVE COUNCIL TODAY.

+THE ONLY SMILING FACES FROM THIS BUDGET WILL BE THOSE ON THE AFFLUENT, AND CONFESS THAT I WOULD PREFER TO SEE THEM, RATHER THAN THE MAN IN THE STREET, LOOKING A LITTLE GLUM.

+A PROGRESSIVE INCREASE IN DIRECT TAX AT THE HIGHER LEVELS OF INCOME MIGHT NOT PRODUCE SO MUCH REVENUE BUT IT WOULD AT LEAST PROVIDE THE CONSOLATION THAT THOSE WHO COULD AFFORD IT BEST WERE CONTRIBUTING SOMETHING EXTRA WHEN TIMES ARE HARD.+

HE POINTED OUT THAT IT WAS GENERALLY ACCEPTED THAT DIRECT TAX WAS MORE EQUITABLE AS IT WAS BASED MORE ON THE PRINCIPLE OF ABILITY TO PAY.

+ IT IS CERTAINLY ARGUABLE THAT HONG KONG'S FINANCIAL SUCCESS IN THE PAST HAS HINGED ENTIRELY ON OUR LOW DIRECT TAX STRUCTURE, AND AM INCLINED TO SUGGEST THAT IT IS DUE AS MUCH TO BOTH BUSINESS FINANCE AND LABOUR BEING ABLE TO RELY ON ANY CHANGES IN THE TAXATION LEVEL BEING GRADUAL RATHER THAN DRASTIC, HE ADDED.

WITH REGARD TO INDIRECT TAX, DR HUANG STRESSED THAT HE HAD NO OBJECTION TO A STEADY INCREASE IN INDIRECT TAXATION, OR TO A HEFTY INCREASE WHICH CLEARLY AFFECTED ONLY THOSE WHO COULD WELL AFFORD TO PAY.

BUT HE EXPRESSED FEARS THAT THERE WAS A REAL DANGER OF THE DRASTIC INCREASES PROPOSED CAUSING SEVERE HARDSHIP TO SOME WHO REALLY COULD NOT AFFORD THEM.

HE QUOTED THE EXAMPLE OF THE 300 PER CENT INCREASE IN THE DRIVING LICENCE WHICH, HE MAINTAINED, WOULD AFFECT ALL THOSE WHO NEEDED SUCH A LICENCE FOR THEIR LIVELIHOOD AND PEOPLE OF THE LOW INCOME GROUPS RATHER MORE THAN EVEN THE MIDDLE CLASSES.

THE DRASTIC INCREASE IN VEHICLE LICENCE FEES, THE SECOND WITHIN A YEAR WAS ANOTHER AREA OF CONCERN.

STATING THAT THE INTENTION OF THIS YEAR'S INCREASE WAS DIFFERENT FROM LAST YEAR'S +HORRENDOUS+ INCREASES WHICH WERE MEANT TO REDUCE THE NUMBER OF CARS ON THE ROAD, DR HUANG CALLED ON THE GOVERNMENT TO MAKE THE INCREASE THIS TIME MUCH LESS SUBSTANTIAL OR NONE AT ALL FOR THE SMALL CAR WHILE TAXING HIGHLY THE OWNERS OF PRESTIGE CARS BOTH IN VEHICLE LICENCE COST AND IN PURCHASE TAX. +

HE EXPRESSED THE HOPE THAT THE FINANCIAL SECRETARY WOULD ADOPT, AS HE HAD PROMISED TO CONSIDER, AN AD VALOREM DUTY ON ALCOHOL RATHER THAN A UNITARY SYSTEM OF LEVY.

ON THE SUBJECT OF SUPPORT FOR THE BASIC INFRASTRUCTURE, DR HUANG SAID IT WAS IMPORTANT FOR THE GOVERNMENT TO ENSURE THAT THE MARKET FORCES ON WHICH HONG KONG'S ECONOMY DEPENDED, OPERATED FAIRLY, EFFICIENTLY AND SPEEDILY.

HE THOUGHT