TNAG-0571-FCO40-704-Planning-paper-on-Hong-Kong-1976 — Page 113

CONFIDENTIAL COVERING SECRET

way now that the recession is over but delay in the implementation of the agreed social programmes in the future will not be acceptable as long as taxation rates are as low as they are at present. Λ step by step raising of the limit of direct taxation to, say, 20% is an important adjunct of the strategy as a whole.

5.

While we agree there is scope for greater public borrowing, the main burden of extra revenue should fall on the tax-payer.

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SOCIAL SECURITY (para 26, Annex C para 12 and Annex D paras 2-5)

1. We are glad there is general agreement on the desirability of formulating proposals for transfer payments. We appear to be agreed that the first priority is to extend present public assistance arrangements to able-bodied males between 15 and 55 (in practice a form of unemployment benefit).

2. We believe, however, that urgent consideration should also be given to an appropriate unemployment benefit scheme perhaps, though not necessarily, with a contributory element and which would be an entitlement. We assume the Governor agrees that this should form part of the proposed expansion of Hong Kong's social security arrangements.

3. In our view, Hong Kong would greatly benefit from having the assistance of an acknowledged social security expert at an early stage. We believe he would have a useful contribution to make, similar to that provided by the British expert who is Chairman of the Inland Revenue Ordinance Committee (para 22 of the Planning Paper).

HOUSING, EDUCATION AND HEALTH (paras 27 and 28, Annex C paras 13-15, Annex D paras 6-15)

1.

There is agreement with the Governor on these subjects and no points need to be made.

INSTITUTIONAL REFORM (paras 29-32, Annex C paras 16-22)

1.

We are glad that the Governor has accepted the need to move more quickly towards widening the social basis of the Legislative

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CONFIDENTIAL COVERING SECRET

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