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particularly in the fields of education and housing, but to make it clear to the Hong Kong Government to rest on their oars now that they are near to achieving the objectives laid down in the Planning Paper. He might suggest that officials should soon start discussing the next phase of social development.
5. The Minister of State will wish to express his concern at the lack of momentum in introducing a more progressive tax system in Hong Kong. We share the disappointment of the Governor and the Financial Secretary over the report of the Inland Revenue Review Committee, but equally we agree with the assessment of the World Bank report on Hong Kong's economy and budgetary system. We believe, together with the World Bank, that Hong Kong should first decide what public expenditure is necessary and then determine what taxation is needed to fund it rather than, as now, assessing the revenue and deciding how the resultant funds should be spent. We do not agree that Hong Kong's taxation system leaves the poor untouched. They pay rates at a comparatively high level and have to find pensions, unemployment and sickness benefits from their own funds. Higher taxation of the better off would enable a wider range of benefits to be paid.
More Democracy in Hong Kong (Brief D) j
6. The Minister of State will wish to confirm his interest in a wider based membership of LegCo. The Minister may also wish to suggest that the Hong Kong Government should consider whether the time has come to extend elected status to the membership of a range of statutory bodies such as the District Advisory Boards.
The Textiles Negotiations (Brief E (a.i) (Defensive)
7.
I recommend that the Minister should avoid detailed discussion of the renegotiation of the MFA. The negotiations have now reached a critical phase and if the Governor wishes to go into details
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