TNAG-0570-FCO40-703-Planning-paper-on-Hong-Kong-1976 — Page 126

2.

SECRET

technical reasons, but they accepted an

increase in profits tax of equivalent yield.

The paper failed to point out the extreme

resistance to Government levies of any sort

by all levels of the population; it was an

issue on which Right Left and Centre made

common cause. The height of Government

charges and taxes was a prime target for

communist united front propaganda. No doubt

the C.P.G. had its own financial reasons for

objecting to tax increases. In the face of

this pretty united and potentially explosive

opposition, it was the policy of the Government

to edge up expenditure year by year. The

average was 11% growth in real terms per year,

or doubling in 7 years. Whilst there

might be room for expanding both the level

and yield of taxation the system was archaic and

little progress could be made until it had

been overhauled.

A commission had already been

appointed to do this which would report by

the end of the year. It would be disadvantageous

to give publicity in Britain to this commission

until its findings were known.

c) Appointing grassroots candidates to the

Legislative Council would help social cohesion

and the look of Leg. Co., but it certainly would