TNAG-0761-FCO40-965-Budget-of-Hong-Kong--1978-1979-1978 — Page 76

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fiscal changes and reforms in recent years, the productivity of our fiscal system one of our essential strengths and the incidence of the tax burden, I shall need to dilate on future requirements

as revealed by the forecast for the new three-year forecast period, 1979-80 to 1981-82. This will largely involve reporting on the state of play on our consideration of the Report of the Third Inland Revenue Ordinance Review Committee, namely,

(a) recommendations not accepted by the Administration (e.g. working wife's allowance) and not requiring,

therefore, reference to XCo;

(b) recommendations accepted by the Administration and not requiring reference to XCo (e.g. drop the idea of a dividend withholding tax);

(c) recommendations likely to be accepted (e.g.

taxation treatment of shipping profits);

(d) recommendations still under consideration (e.g. mandatory assessments of aggregate income);

and then I shall go on to announce the Government's decisions on the taxation treatment of interest.

13. I must also have another go at the taxation of trading profits, though there is nothing to be done that I can think of, and I must pick up several bits of unfinished business (e.g. taxation of the value of quarters, taxation

treatment of clubs and the abuse of the two-instalment system for payment of provisional tax). I also intend to forecast further reform of our system of depreciation

allowances to encourage investment.

14. Next there is the perennial problem of fees and charges, particularly for public utility type services. I shall have to sound a warning that we cannot postpone indefinitely an increase in water charges (the Water Authority's accounts barely broke even in 1976-77, have moved into deficit of $275 million in 1977-78 and are

STOPET

/forecast.

D •