Tax goal lights up second-raters

Our financial secretary, Donald Tsang Yam-kuen, is at last experiencing what it is like to be a finance minister in almost any other government in the world.

He is running a big budget deficit that will take a lot of effort to swing into surplus, but all his efforts to improve revenues meet with protest and all he gets is proposals to spend even bigger sums.

Welcome to the real world, sir.

Unfortunately, his latest effort to raise fees and charges may be flawed by bad arithmetic.

He wants these to go up, he says, because they provided about 20 per cent of government spending 10 years ago and now contribute only 8 per cent.

We shall use the words 'may be flawed' here because the way our Government presents its accounts is sometimes mighty confusing.

It could really do with hiring a few private sector accountants to show it how the job is done.

Nonetheless, its figures show that revenue from what it calls fees and charges amounted to 5.8 per cent, not 8 per cent, of total expenditure in the 1998 fiscal year, the last for which the breakdown is available, and 10 years earlier it was just under 10 per cent, not 20 per cent.

What is more, as the chart shows, that 10 per cent figure for the 1988 fiscal year was an absolute peak.

Go back just another five years and fees and charges accounted for lower proportion of expenditure than they do now.

But let us leave this aside as a minor quibble. Mr Tsang's basic reasoning for seeking more money is undoubtedly right and is certainly sounder than that of some of his critics who object to the 'already heavy burden shouldered by the public' or think increases should only be made where they do not relate to people's livelihood.

The burden is placed on the public when we decide to spend money, not when we decide how to raise it.

Does unionist legislator Lau Chin-shek, who made this objection, think we will get the money from Mr Tsang's fairy godmother if we bury our heads in the sand when revenue questions come up? And as to the idea that increases should not be made on items related to people's livelihoods, your correspondent offers a free bottle of scotch to the first person who sends him an e-mail (address in the blue box) telling him of any form of tax that is not related to people's livelihoods.

Then we get the idea, also proposed by Mr Lau, of a progressive profits tax that will hit our companies harder the more profit they make.

Your correspondent's status as an immigrant to Hong Kong from Canada (yes, it is sometimes a two-way street) entitles him to laugh at this one.

Do you want to collect less tax? It's simple. Just go to Canada and see how it is done with progressive taxes. They are an ironclad way of driving your tax base offshore and guaranteeing widespread tax cheating in what remains.

They also have that hugely desirable effect of depriving your economy of investment.

What a wonderful way of recovering from recession.

Finally, we have a triumph of logic from another legislator - the Government should scrap rates because municipal councils are also to be scrapped and thus there will no longer be a link between rates and municipal services.

Let us all rejoice. The free lunch has been found at last. Mr Tsang's fairy godmother will collect our rubbish too in the future and charge us nothing.

We shall forgive Mr Tsang for his arithmetic. He is an intellectual lighthouse in the midst of this mob.

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