TNAG-0453-FCO40-518-Budget-of-Hong-Kong-1974-1975-1975 — Page 147

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even after allowing for the extra $117 million to be raised

in 1974-75 from increased duties on liquor and tobacco, increased

First Registration Tax on vehicles and rating in the New

Territories, the ratio of direct to indirect taxation will

still be 47:53 as opposed to my target of 45:55. Before

my 1972 and 1973 budget proposals, which relieved a wide

range of hydrocarbon oils from duty and abolished duty on

table waters and entertainment tax, the ratio was 43:57.

1973-74 the ratio moved to 49:51 leaving plenty of room for

more indirect taxation. As I have just said, this year's

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budget proposals will bring the ratio back to 47:53 but no

further. So I am not opposed on fiscal policy grounds that

is to say on the grounds of equity and the balance of the

system to a further increase in the relative importance

of indirect taxation, but I certainly cannot guarantee that

extra revenue will not have to be found from the direct tax

field too. The fact is that over and above the net increase

of $175 million in taxation proposed for 1974-75 a further

$500 million a year has to be found in the forecast period.

And this is on the assumption that the economy will be growing

at 7% per annum in real terms and that the tax system

generally will be producing yields consistent with this high

growth rate.

36.

True, but in

I also made certain quite heroic assumptions about

capital revenue and I must here challenge the logic of my

honourable Friend Mr. P.C. Woo's plea to sell more land.

He said "we have repeatedly urged the speeding up of the sale of much more land for private development".

the past this plea has been linked with allegations that the

Government was manipulating the land market to keep prices up.

Now we are being urged to sell more land, the effect on

land prices notwithstanding, to raise more revenue!

plain fact is that land is offered for sale when it is available

and assuming that the market is not in a particularly depressed

state at the time (for it would not be in the public interest

to depress further asset values).

The

/37.....