TNAG-0453-FCO40-518-Budget-of-Hong-Kong-1974-1975-1975 — Page 140

17.

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But what I would be willing to consider would be an arrangement similar to that we have adopted for supplementary grants to the Universities and the universities also have staff for whose salaries the Government accepts no automatic obligation. If the University and Polytechnic Grants Committee can establish that substantial increases in costs generally are inhibiting the Universities' programmes, then we consider the possibility of a mid-quadrennium increase in the grant.

Applying a similar principle to voluntary agencies subvented on a discretionary basis, I would be willing to consider seeking supplementary provision for additional grants provided that the voluntary agencies can persuade the departments concerned and they in turn can persuade the Secretariat that substantial (and I stress the word substantial) increases in costs during a financial year are affecting the agencies' ability to provide the services for which they are subvented.

18.

This proposal must not be taken as imposing an obligation on the Government to provide supplementary grants even if the adverse effects of increased costs can be

established. We are talking about supplementary provision during a financial year and whether or not the additional grants can be approved must depend, as all other applications for supplementary provision will, in future, depend on the budgetary position of the moment.

19.

(c) Depreciation relief

My honourable Friend Dr. S.Y. Chung renewed a plea made several years ago for changing the existing basis of calculating depreciation allowances for tax purposes from the "reducing balance" to the "straight line" method This question was considered at some length by the last Inland Revenue Ordinance Review Committee (vide paragraphs 333 et seq of the 1968 Report) and rejected and I do not see any case for taking another look at it. I must, however, point out to my honourable Friend that I cannot see how the introduction of a straight line method would further encourage industry to re-equip because it is inherent in the straight line method that the

rate of allowance which would be offered must be lower than

the rate offered under the reducing balance method and so the allowance in the early years of use would be less than under

the reducing balance method.

/My....