TNAG-1729-FCO40-2442-Minutes-and-Hansards-of-the-Legislative-Council-of-Hong-Kong-1988 — Page 175

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44.

Mr. Martin Lee rightly pointed out that I did not actually propose the introduction of a sales tax either for this

year or in the near foreseeable future. There is no need for me

to repeat all that I said before; I. refer Members to the

le relevant paragraph in my Budget speech and in particular to the last sentence where I remarked: There is, therefore, much more

repeat, any proposals to be done before I am able to present any proposals for public

Sir debate.⭑ (3).

By referring to this matter in my Budget speech, A

le

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I had hoped to generate a more philosophical and less political

response,.

Councils Because there was no specific before this Council proposal, I do not consider it necessary to answer each and every point made by Members. Of course, many of the comments made were entirely valid, and indeed have been uppermost in our minds in putting our ideas together. Clearly, the inflationary

impact of any indirect tax would have to be carefully assessed and I would certainly be very hesitant about introducing such a

tax during a period of rising inflation.

15.

The point I was making in my Budget Speech was that a

measure of tax diversification could well lead to a more stable

tax regime. By this, I mean a tax regime more resilient and

better able to withstand difficult times without major

adjustments either in rates of tax or sources of revenue.

Furthermore, it would give me the opportunity and scope for rationalising some of the existing indirect taxes. In other words, I might be able to reduce or abolish some of the existing indirect taxes, and indeed might also be able

able to reduce some

direct taxes. I would not wish to suggest a trade-off at this

stage, but it is worthwhile bearing in mind the possibilities. Clearly, a tax regime based on lower direct taxes would be more

conducive to investment.

(3)

1988 Budget speech, paragraph 50

17

/46.