(Resent with corrected link)

Tuesday, 26th September 2006

Dear Reader,

Myth number 2 on the GST proposal: "in the event of an economic downturn... we might have to increase Salaries Tax rates." Fact: In the 1999-2000 budget, Donald Tsang announced a 10% rebate on salaries tax, profits tax and property tax for the previous year, returning $8.5bn to taxpayers. Fact: on 23-Apr-03, during "atypical pneumonia", as it was then known, the Government announced a package which included a salaries tax rebate worth $2.3bn, and waivers of license fees, rates, water, sewage charges and reductions in commercial rents worth a total of $3.14bn. These revenue sources were only so volatile because the Government chose to make them so. They increased their own deficit, drawing down on reserves created by previous surpluses. Now, we are generating surpluses again.

Myth number 3: a GST would be "a more stable source of revenue" than salaries tax. Fact: relatively few people in HK pay salaries tax, partly because so many are so poor, and partly because Donald Tsang raised allowances so much while he was Financial Secretary. Since GST would apply to everyone, rather than the few, in a downturn, there would be even more pressure to cut GST than there would be to cut salaries tax. So GST is unlikely to be a more stable revenue source than salaries tax.

And now, a message for the sake of the planet...

Avoiding the Logjam (26-Sep-06)
Hong Kong is gradually being submerged in a landslide of printed IPO prospectuses, some running to almost 1,000 pages in bilingual form. Webb-site.com proposes a solution which can be quickly implemented and avoids a long wait for enabling legislation. (26-Sep-06)

Submission to Legislative Council on Rail Merger Bill (25-Sep-06)
In response to an invitation from the Legislative Council Bills Committee, Webb-site.com editor David Webb urges the Government to stop wasting scarce legislative resources and rethink the rail merger proposal and its transport policy in general. If the proposal is not amended, we will lead a campaign for 300,000 minority shareholders to protect value by voting it down.

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David M Webb
Editor, Webb-site.com