TNAG-2217-FCO40-3184-Constitutional-development-in-Hong-Kong-1991 — Page 3

remaining 50% is deemed as reimbursement for expenses which are not subject to taxation. Alternatively, he may claim allowances on the basis of a detailed breakdown supported by receipts, So that any remaining unaccountable amount will be deemed as payment for holding of office.

6

A single system of allowances provides flexibility and is easy to administer. The disadvantages are that -

7

(a)

(b)

(c)

(d)

it mixes together two types of payments of entirely different nature;

For

updating of the allowances is complicated. expediency, a weighed price increase index in respect of expenses incurred is applied to the whole allowance irrespective of the component for payment for holding office;

reimbursement may not be based on actual expenses incurred. It is desirable to require claims to be accountable, both in terms of financial control and public accountability; and

in financial terms, it may be said to have favoured those (arguably appointed members) who have little or no need to incur expenses.

Despite the differences in terminology, the Municipal Councils and district boards have adopted the same system. The current levels of allowance for members of the three-tier government are summarised in Annex A.

The case for a new arrangement for the Legislative Council

8

allowances.

The 1991 direct elections to the Legislative Council will add a new factor in the consideration of Members' First, the constitutional status of the Legislative Council and hence that of legislators will be enhanced. Secondly, this, together with the increasing complexity of governing Hong Kong means that legislators will have to devote much more time to Legislative Council business. Thirdly, directly elected members will be returned from geographical constituencies with an average population of 500,000, generating a great deal of constituency-related business. It is likely that at least some of the directly elected members will regard Legislative Council work as their main occupation, requiring full-time commitment. Fourthly, there is a need to provide more resources to individual legislators So that they will be better able to cope with the work of the Legislative Council. In these circumstances the existing

of

arrangement

a

CONFIDENTIAL