TNAG-0569-FCO40-702-Planning-paper-on-Hong-Kong-1976 — Page 32

(17865) Dd.145178 400m 5/73 G.W.B.Ltd. Gp.863

NOTHING TO BE WRITTEN IN THIS MARGIN

11.

CONFIDENTIAL

Would not a 'luxuries' tax be counter-productive, being easy to evade and costly to administer?

No.

The possibilities for evading the tax, bearing in mind that a high proportion (though not all) the items involved would be imported, are very limited, whilst the additional administrative burden could fairly readily be taken on board by the Excise Section of the Commerce and Industry Department. Nonetheless,

it cannot be assumed that collection costs would be zero, and it would be prudent therefore to earmark, say, HK$70 million at 1976 prices (about 20% of the expected yield in 1979/80) as a

maximum annual contribution towards recurrent expenditure on this

soore.

CONFIDENTIAL