HAMISH Macleod's tentative prediction of a modest surplus for 1993-94 - further proof of the Government's tendency to underestimate revenues - leaves him in the enviable position of being able to offer further tax concessions in the coming year. He suggested yesterday he might jump at the chance - but he failed to mention who would benefit.
Here is a helpful hint. It should be salaries tax payers, not companies or stock market punters. The General Chamber of Commerce has recommended there be no reduction in stamp duty on share dealing. It rightly argues the current rate has not curtailed trading.
The same argument may be used against the chamber's call for a cut in profits tax. The chamber argues Hong Kong's low rate of tax is no longer exceptionally attractive in regional terms. But it is clear from the high level of activity in the economy thatit is not exceptionally unattractive either. As the Financial Secretary pointed out in his budget speech in March, the previous year's increase had no appreciable impact on international enthusiasm for investment in Hong Kong. In the present climate, political worries are far more likely to make a difference.
By the same token, this year's easing of salaries tax thresholds did not, as some critics predicted, lead to a runaway increase in inflation.
But it remains the case that a small number of salaries tax payers contributes a disproportionate share of revenues. Mr Macleod estimated in March that just seven per cent of taxpayers would contribute $12.2 billion this year - or 55 per cent of the salaries tax yield.
Broadening the tax base would be politically difficult and raising thresholds would add to the burden on this small group. A more equitable solution would be to grant all wage and salaries earners a one-off, temporary tax holiday, thus mopping up some ofthe surplus. To coin a phrase, however, it might last months, rather than weeks.