TNAG-0622-FCO40-770-Budget-of-Hong-Kong-1977 — Page 87

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But

of representations on the inadequacy of personal allowances.

as the Committee's terms of reference precluded it from considering

matters of fiscal policy which were reserved to Government, that

particular point was not discussed in detail. However, the

Committee still found it necessary to express sympathy and to

mention that it had no doubt that Government would keep the

severity of the tax burden under review at all times and make appropriate adjustments to the present level of allowances.

public, especially the lower income group, are of course pleased

that the Financial Secretary has proposed some adjustments by

introducing a supplementary allowance, qualified by a claw-back

provision. This is certainly a step in the right direction. However,

as in all tax matters, there are quite a few public comments which

may be summarised as follows :-

The

(1)

that the amount of supplementary allowance is not

sufficient;

(2)

that the claw-back is too complicated;

(3)

that the supplementary allowance should be made basic

and without claw-back.

A tax on certain incomes is a compulsory payment to general

revenue to finance the services which Government provides. It is

therefore obligatory for members of the public to contribute, by way

of tax, a part of their incomes to the general revenue. But in calculating the tax, there should be deducted a tax-free allowance for the taxpayer's subsistence. A clear principle for the tax threshold was laid down in the Second Report of the Royal Commission

on the Taxation of Profits and Income (also known as the Radcliffe

Commission) and here I quote

"there should be no income tax

levied upon any income which is insufficient to provide its owner with

what he requires for subsistence". By subsistence the Commission meant

w

"an income large enough to equip and sustain a healthy and efficient

citizen, not merely to keep him alive". This same principle was expressed in a different way by the then Financial Secretary in this Council on 25th February, 1970. When proposing the introduction of

Lower Income Relief, Working Wife Allowance and Dependent Parent's Allowance, he said "The principle by which such allowances (i.e. personal allowances) were fixed in most countries was that they should represent the basic income required to support a family in its parti-

cular family circumstances,"

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