TNAG-0621-FCO40-769-Budget-of-Hong-Kong-1977 — Page 98

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20. THE FIGURES FOR HOUSING IN PARA. 19 ARE EXTRACTED FROM THE GENERAL ACCOUNT. FOR GROSS EXPENDITURE MUST BE ADDED

DRAWINGS BY THE HOUSING AUTHORITY ON THE DEVELOPMENT LOAN FUND AND ITS RENT REVENUE (WHICH IS ALL PLOUGHED BACK INTO EXPENDITURE) THE GROSS EXPENDITURE FIGURES ARE '76/77 DOLLARS 659 MILLION AND '77/78 DOLLARS 1019 MILLION) INCREASE 56%).

21. AS OUR FISCAL RESERVES AT 1ST APRIL 1977 WILL AMOUNT TO WELL OVER 40% OF ESTIMATED EXPENDITURE IN 1977-78, THERE IS NO NEED TO BUDGET FOR A SURPLUS IN ORDER TO AUGMENT THEM, PARTICULARLY AS THERE ARE FOUR TAX REFORMS WHICH ARE CALLED FOR, VIZ:

(A)

THE SUPPRESSION OF THE EFFECT OF REVISED RATEABLE VALUES (EVEN AFTER THE REDUCTION OF THE GENERAL AND URBAN COUNCIL RATES TO 7 AND A HALF AND 4% RESPECTIVELY) TO A GIVEN PERCENTAGE OF THIS YEAR'S PAYMENTS, NAMELY, 133 1/3% IN 1977-78 AND 177.7% IN 1978-79 MOVING TO THE FULL CHARGE IN THE THIRD YEAR (WITH EXCEPTIONS FOR PRE-WAR RENT CONTROLLED PREMI SES. AND, POSSIBLY, A FEW HARD LUCK CASES). COST TO THE REVENUE: DOLLARS 45 MILLION IN THE FIRST YEAR AND DOLLARS 8 MILLION IN THE SECOND (REASON LARGELY POLITICAL):

(B)

IMPROVEMENT OF PERSONAL ALLOWANCES AND CHILD ALLOWANCES IN SUCH A WAY AS TO REMOVE FROM THE TAX NET COMPLETELY THOSE PAYING VERY SMALL AMOUNTS OF TAX, THE EFFECT WILL BE TO SHIFT THE RELATIVE BURDEN UPWARDS. COST TO THE REVENUE DOLLARS 64 MILLION IN THE FIRST YEAR BECAUSE FINAL TAX FOR 1976-77 AS WELL AS PROVISIONAL TAX FOR 1977-78 WILL BE AFFECTED, BUT ONLY DOLLARS 38 MILLION THEREAFTER (REASONS: ADMINISTRATIVE AND SOCIAL) :

(C) INCREASE EXEMPTION LIMIT FOR ESTATE DUTY FROM DOLLARS 300,000 TO DOLLARS 400,000 AND THE LIMIT ON FUNERAL EXPENSES FROM DOLLARS 5,000 TO DOLLARS 10,000. COST TO THE REVENUE: DOLLARS 1.75 MILLION. (REASONS: TO MAKE THE SCHEDULE MORE LOGICAL AND TO TAKE ACCOUNT OF INFLATION).

(D) ELIMINATE FROM THE SCHEDULE TO THE STAMP ORDINANCE FIVE ARCHAIC HEADS AT VIRTUALLY NO COST TO THE REVENUE AND IMPROVE THE CONCESSION- ARY RATES OF DUTY ON CONVEYANCES OF LOW VALUE PROPERTIES TO ASSIST LOW INCOME HOUSE PURCHASERS. COST TO THE REVENUE:

DOLLARS 15 MILLION

(REASON: SOCIAL)

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