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between variables - a view lacking in economic reality. Such expression of
relationships are usually confined to econometric models which do, of course,
involve fixed and variable relationships; their continued public pronouncements
could be counter-productive in that flexibility could be restrained.
TAX CHANGES
10. The 1977 tax changes worth HK$ 127 (= £m15) do not add up to anything
very much other than administrative conveniences. Concessions in personal
tax allowances, with a limited amount of progressivity, are to be welcome, as
is that on stamp duty concessions on lower value properties. The concessions
on local rates and the raising on estate duty levels have an air of regressivity
about them. They are a concession to higher property owning and income groups
(or their survivors) which is difficult to defend. Less than adequate
justification is given as to why, firstly, a total of $m 127 tax concessions
is required and, secondly, how these particular tax changes are related
to Hong Kong's overall economic and social policies. It would not be too
difficult to produce fiscal reforms totalling the same amount which are more
equitable and progressive in nature. We would not regard a marginal tax rate
of 30% as high, especially when it is subject to a 15% average maximum, with
its regressive characteristics.
HOUSING
11. The proposal that the Housing Authority is to have more flexibility in
determining rents having regard to the tenants ability to pay is to be welcomed
in principal but one wonders whether the Housing Authority is the correct body
to determine subsidies (it is one more step removed from FCO!). The new
home ownership scheme aimed at financing flats for sale to lower-paid families
deserves similar acclaim. These developments are a (small) step forward in
redistributive policies, as at present this is an important method of
redistribution of an imbalanced and inequitable distribútion of territorial
wealth.
STATISTICS
12. On the statistical front there appears to be three weaknesses which the
Budget demonstrates. Firstly, the analysis on Hong Kong's very important
international position is restricted by lack of data in the Balance of Payments.
The Trade accounts covered do not provide the full story and it is not possible
to fully assess the economy without Balance of Payments data which are not yet
available. Secondly, linking in with an earlier point on Hong Kong as a
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financial haven,
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