9. The need for low taxation in Hong Kong has long been accepted, but from time to time suggestions are made that present rates could be increased and still remain low compared with both neighbouring countries and enonomically advanced countries. The danger lies not only in exceeding some figure on the borderline between "low" and "high" rates but in changing rates of taxation so that the community both local and international - loses faith in the stability of taxation. This stability is important for confidence, and investment decisions. In far too many countries popular demands for public services has led to increasing calls on public revenue and this has been found by increasing taxation.
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10. Low taxation means that people can retain the bulk of their earnings to dispose of as they wish. The successful will be able to retain their wealth and, because people know this, there is an incentive to succeed. Heavy taxation not only robs people of the right to do as they wish with their own earned wealth but erodes the incentive to create greater wealth.
Improvement of Public Services.
11. In a place where there is steady economic growth there is no contradiction between the need for low taxation and improvement of public services. Even with the allocation of a fixed proportion of the wealth of the community to the public sector, the amount available will increase as the wealth of the community increases.
12. The amount will not increase without limit. This means there must be constant debate on priorities for public expenditure. Each year a great deal of expenditure is required to implement earlier decisions and commitments but over time it is possible to vary priorities as services in various sectors reach adequate standards and as more resources become available.
13. Law and order, municipal services and the principal social services of housing, education, medical, and social welfare will consume the bulk of public expenditure, but finance has been found for less obvious activities such as recreation and culture. Furthermore much good welfare work is financed by private donation. A feature of a low tax society is that those who make fortunes are able to donate to charity and this is done on a large scale in Hong Kong. Government restraint on public spending should not deter private charitable donations.
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