TNAG-0569-FCO40-702-Planning-paper-on-Hong-Kong-1976 — Page 37

CONFIDENTIAL

DSR 11C

15. Is there any room for manoeuvre in boosting this scale of assistance without still further increasing taxation?

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Possibly. For example, if the Inland Revenue Ordinance Review Committee were to come up with proposals for increasing the productivity of the tax

system at present rates and these were implemented, there might be scope

either for raising the levels of benefit or in not increasing taxes by

as much as is suggested in questions 6, 8 and 9. Then, as mentioned in question 14, savings might be effected on subventions to private social welfare organisations. There is also the point that the proposals for raising revenue in questions 6, 8 and 9 are based on Budget forecasts

of tax yields which are probably unduly conservative, that is that the

proposed tax increases are probably on the high side. As against this, however, it must also be recognised that some unforeseen event in the

world economy could mean that the gross domestic product might not rise as rapidly as the Budget papers suggest and that the tax increases might, therefore, have to be even larger (either that or any new scheme for

social welfare might have to be less ambitious than envisaged in question 14).

CONFIDENTIAL