TNAG-0761-FCO40-965-Budget-of-Hong-Kong--1978-1979-1978 — Page 105

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(B)

PROBABLY REVISED ARRANGEMENTS FOR TAXATION OF SHIPPING

PROFITS.

4. IF, AS PREVIOUSLY FORECAST, WE MOVE INTO DEFICIT IN 1979/88, 1980/81 AND 1981/82, THIS ADDITIONAL INCOME WOULD BE USEFUL AND JUSTIFIABLE. AN INCREASE IN PROFITS TAX CAN BE HELD IN RESERVE.

5. GENERALLY SPEAKING, I THINK THAT TO GO FOR A BALANCED BUDGET THAT WILL FUND ALL EXISTING AND NEW PLANS AND PROGRAMMES IS

SUITED TO THE UNCERTAINTIES AND MOOD OF THE POST E.E.C NEGOTIATION

SITUATION.

6. THE DETAILS WILL BE IN THE NOTE. I WILL TELEGRAPH A

BREAKDOWN OF SOCIAL EXPENDITURE IN ABOUT A WEEK. IT, OF COURSE,

WILL SHOW A LARGE INCREASE.

MACLEHOSE

FILES

HK & GD (5)

PS/LORD GORONWY ROBERTS

MR CORTAZZI

MR MURRAY

COPIES TO:

MR SMITH, ECONOMISTS D

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