1967-11-19 — Page 15

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日八十月十年未丁壓有

10168英文中學會考試題預習專欄

經濟及公共事務科(三) 劉奇敏。

Economic & Public Affairs

Lecture No.

K.M. Lau,

The Financial Affairs of Hong Kong Government

In the course of your study of 5.P.A. you will learn (or may have already learned) how our Government collects money from the citizens in order to provide community services for the people.

In the present lecture I shall touch on a rew important topics relevant to the financial aspects of Hong Kong Government,

Taxation 19 one of the principal sources of revenue from which the Government relies for its annual expenditure. It ma ba defined as a system of collecting sums of money from the citizens by authorized Government officials, either directly or indirectly, to enable Government to finance developmen: projects in the country and to provide vital community services for the people.

Economists have generally agreed that the system of taxation in a country can operate efficiently if the four basic principles advocated by a Sect political economist, Adam Smith many years ago, arp closely followed

dasic Principles of Taxation

(1) The first principle is that the rate of tax should be

in proportion to a man's earninge.

Voor people in Hong Kong do not pay any tax (that is as far as direct tax is concerned), but salaried single people whose yearly income is in excess of $7,000, have to pay a salaries tex which is graded in Such a way that the more person earns the higher is nis rate of tax.

(2) There should be a clear-cut way of calculating the

amount of tax a person has to pay to ensure fairness and accuracy. All forms of tax in Hong Kong can be easily computed without undue complications,

(3) The third principle concerns the payment of the tax,

When a person is called upon to pay his tax he should. not be found in went of money. In Hong Kong, Government sells Tax Reserve Certificates in multiples or $50 which are redeemable at any time, An interesting feature of these Certificates is that when used for paying one's tax, an interest of 4.2 per cent per annum is paid to the holder..

(4) The final principle states that if the tax-collectors

nave to spend more money in collecting the tax than the actual sum collected then that tax should be abolished.

Perhaps you will now understand why Government has decided to get rid of the radio licence fee of $20. per year thus causing a loss of about $4,250,000 annual revenue to the Government,

Government had been unable to check people who avoided paying the annual radio licence fee, and stamp out this form of tax-evasion (1,e, escaping from paying a tax) would cost Government more than would like to spend,

Radio listening la a comunity enjoyment and it has often been argued that for this very reason it should be made available to anyone without any charge. With these reasons Govemment thus abolished the radio licence fee on 1st April this year.

Do you think that the Television broadcast receiver Licence of $36 per year should also be abolished for the same reasons, especially when Government is not and will not, be operating a wireless television station of her own?

The Colony's Annual Budget

A budget is somewhat like a bank statement." It shows now much a person is going to spend on his rent, food, clothes, bills, entertainments, etc, and how mich he is going to earn. A budget enables him to forecast with nas nable accuracy his economic position day for the

naxt month.

When the Government of Hong Kong plans a budget it plans for a period of twelve months starting from the 1st April of one year till the 31st March of the following year (this period is known as the financial, or less commonly known; fiscal year,)

Outline showing the preparation of the Colonyls annual budget.

(1.) At the beginning of February each departmental head

is to estimate the probable expenditure and probable revenue of his department. His estimates should be based on previous years' statisties. For any extraordinary increase in expenditure he has to supply. the reasons.

(2) The Financial Secretary, himself, also drafts out

respective statements of estimates for the various. departments.

(3) Each departmental head then sends in his statement

of estimates to the Financial Secretary, who compares those he receives with his own estimates.

(4) It may be necessary, sometimes, for the Financial

Secretary to hold discussions with the departmental heads when adjusting any differences arising from his careful comperison,

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(5) The Financial Secretary then finds out the total.

expenditure of all the departments as well as the total amount of revenue of the departments, (6) The Financial Secretary is then able to arrive at

the future financial position of the Government, whether there is going to be a deficit or a surplus, (7) If there is a deficit, the Financial Secretary must

propose how this deficit is to be overcome, either by introducing a new licence, or by increasing existing rates of tax. pa

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(8) The Financial Secretary then writes a report on the Colony's economy, giving reasons why he 19 going to introduce certain proposals.

(9) At the end of each financial year, usually during

the first week of Marchy a day is appointed for the budget to be presented before the Legislative Council, which through its Finance Standing Committee

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(whose Cnsirman 19 the Colonial Secretary), examines and subsequently approves the yearly expenditure of each department, (10) The Governor, as President of the Legislative

Council, then appointe a date for the Unofficial Members of the Council to debate on the estimates or the budget.

(11) After the Unofficial Members nave questioned and

criticized the estimates of the budget, a dete il appointed for the Official members to reply. A vote Is then taken, and if an unanimous vote is passed the budget is then approved and accepted.

(12) The Financial Secretary's proposals are then

introduced into the Legislative Council's ordinary meetings, in the form of bills, and hie, proposals are only adopted when the bills have become ordinances.

Answers to the questions in Exercise 11

Question: (1) What are the main items of Government

Expenditure? Explain now this expenditure La met.

Answer:

The yearly expenditure of Governmentˇgosa ̈to the. financing of non-recurrent public works and the provision of education, medical facilities and housing as well as the maintaining of law and order.

The fact that compulsory education is not available to children in the primary-school age in Hong Kong clearly reveals the shortage of money for use by Government in the educational field, Government has already expanded its programme on education since 1956 but it is unable to keep in pace with the rapidly inareasing population of Hong Kong. Approximately 16% (or in the region of $300,000,000 per year) of the total expenditure goes to education, it is expected that more will be spent on education in the near future as Government hopes to provide a total of 619,000 subsidized places for every child (between 6 and 11 years old) by 1970.

University education in Hong Kong has also looked to Government for financial support between $35 million and $40 million a year.

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Approximately 15 per cent of the total ammusi expenditure goes to the field of public health Hospit ́s and clinics must be run efficiently and snipped with modern facilities Nurses and doctors must be trained) and specialists must be employed from abroad af these cannot be found locally.

Ever since 1954, after the disastrous fire at Kip Mei, Government has embarked on a most ambitious, project the establishment of resettlement and low-dost housing blocks for squatters, refugees and victims of natural disasters. Expenditure on housing is estím ted to be about $200 million per year.

The construction of roads and bridges, and reclamation projects which come under ons heading "oivil engineering works" cost an annual expenditure of about $150 million.

Another $130 million or thereabouts (or about 7. par cent of the total annual expenditure) is spent on maintaining the Police Forge

The largest single erpe adftire is about #510 m1111on (or approximately 27 per cent of the annual budget) widen goes to the running of about 30 other Government departments.

Maintaining the auxiliary services and the administration of the Registration of Person's Offloo and the Immigration Department take up another $102 million or so every year.

Money spent on getting water from China and supplying the water to the people of Hong Kong da around a yearly average of $203 million,

Publio revenue is obtained from 5 principeI «Bources:- Grants, Loans, Taxes, Miscellaneous Paymanes

and Miscellaneous Fees and Royalties.

inless a catastrophe strikes Hong Kong such sa June floods in 1966, it is not possible to obtain grants from countries broad. However, as a Britási Crown Colony, Hong Kong is entitled to about £1. million from the United Kingdom's. Colonial Development and Welfare Fund, which as a grant we get annually. This grant can only be used for development purposes,

Usually for non-recurrent projects which run into several million dollars. Government may decide to borrow loans either from overseas Governments or from the World Bank,Alh

Taxes provide one of the chief ways of getting the required revenue to meet Government's annual expenditure f

Earnings and Profits Tax forms the first group of⠀⠀⠀ direct taxes, which are:

(a) Salaries Tax;

(b) Profits Tax-

(c) Property Tax;

(d) Interest Tax, and

(e) Personal Assessment.

The other group is made

(a) Estate Duty; (b) Rates

(0) Licences (which include business registration).

Andirect taxes compr150!-

(a) Stamp Duty;

(b) Entertainments Tax;

(c) Bets and Sweeps Tax;

(d) Hotel Accommodation Tax; (e) Gustoms-duty; and

(f) Excise Tax.

The Inland Revenue collected the various taxes (except Rates, Licences, Customs-duty and Excise

totalling about $473.9 million during the 1964 T16:

financial year. N

Miscellaneous Payments include money collected from sales of Grown Land, the supply of water, services supplied by the Kal Tak Airport, the Kowloon-Canton Railway and the Harbour of Hong Kong.

The final source of revenue comes from Miscellaneous Fees and Royalties which include fees paid by citizens when they make use of government departments and their facilities, and royalties from public utility companies arising from their monopolistic franchies. Fines and forfeitures, and revenue collected by the Post Offic also come under this group.

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Question; (2) Mr. Ng is a Sales Manager earning a

monthly salary of $1,800. He also works as a private tutor, earning $60.00 a week. He is married with three children. How much salaries tax mat he pay per annum? If he has 12 Tax Reserva Certificates, eacn worth $100.00 how do these Certificates affect his ultimate payment?

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His annual total income is Annual salary as a sales Manager

$24,720.

- $1,800 × 12

$21,600.

Annual salary as a private tutor.

$60 x 52 $3,120.

Allowances he can claim

$19,000

(a) For himself

$7,000

(b) For his wife

$7.000

(c) For his first two

children.

$4,000

(d) For his 3rd child

$1,000

Total ....

$19,000

3.

His net chargeable income is

$5,720

His salaries tax is

$177.10

Tax on the 1st $5,000 at 2%

$5,000 x

-$137.50

11

I

100

Tax on remainder (720) E.

$720 x

$39.60

x

Therefore tax on $5,720

-$137.50 $39.60

$177.10

Value of 12 T.R.C. (each $100)

$1,200,

Interest payable at 4:2% per

$1,200 x 1 x 4.2

$50.40

100

Total value of 12 T.R.C. whom used)

by Mr. Ng for paying his tax $1,200 $50,40

$1,250,46

Therefore the Inana novenue 1 Department has to give Hr. Ng

$1,250.40 - $177.10 - $1,

Answer: Mr. Ng has to pay $177.10 salaries tax per annum

When he returns the Tax Reserve Certificates toy

the Inland Revenue Department he can collect $1,073.30)

Exercise IH

Distinguish between Civil law and Criminal Law. Explain 5 principles of British Justice which araj adopted in Hong Kong,

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八十日十年示丁胶复

WAH KIU YAT PO

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