The Budget, NPC and NPCC elections as well as campaign activities
related to our own May 24 election of the first HKSAR Legislature
had been keeping reporters very busy.
The 'honeymoon' period seems to have come to an end for Mr. C.H.
Tung's Administration: the public has indeed become very critical
of the Government's handling of housing, education,and health issues;
questions have also been raised regarding our Government's determination
to safeguard free speech in Hong Kong.
Mr. Tung has, for his part, been keeping very busy at home, in
China and abroad. Predictions concerning the Chief Executive's intentions
to move rapidly and position his own officials and advisors were
During a press conference called to announce his retirement, the
Foreign Secretary, Mr. Qian Qichen, announced that major initiatives
would be taken this year to improve Sino- British relations. The
NPC is also taking definite steps towards a market economy and this
is generally taken as good news for Hong Kong.
The Budget brought good news to Hong Kong and was generally well
received by the accountancy profession. This time round, I gave
the Financial Secretary some much needed support in my response
speech. A copy of my speech will be sent to all members before the
end of this month.
Thanks to the concerted efforts of the HKSA Council, the registration
of voters in the Accountancy Functional Constituency was a remarkable
success; our registration rate reached 81.2% with 9,902 voters registering.
I understand that the Council is also determined to work very hard
at ensuring a similar successful voter turnout on election day.
II. Committees and Panels
||Public Accounts Committee (PAC):
||The PAC met a total of 19 times before
I tabled the PAC Report No. 29 Legco on 11 February 1998. The
Report recommends, amongst other measures, wider disclosure
of Government Accounts. It received extensive support and press
||Financial Affairs Panel:
||The Panel held 5 meetings (Agenda
attached as Appendix I). Two particular topics may warrant Councils
||Interest on Tax Revenue Certificates (TRCS): I raised the
point that the interest rates on TRCS were quite low (2-6%)
compared to commercial rates, especially as they apply to large
sum held over long periods of time. It also transpired during
discussions that, in over 50% of disputed cases, there was really
no need to compel taxpayer to buy TCRs. The matter was reported
to the Taxation Committee of HKSA on 21 January 1998 and it
will be taken up further with the Commissioner of Inland Revenue
(CIR) in regular meetings to be held between CIR and HKSA.
||SFC Budget: I pressed the SFC to explain the need for an apparent
sudden increase in enforcement personnel; my questions prompted
SFC to reveal that it was really targeting Finance Companies
regulations as they relate to the activities of stockbrokers.
SFC finally agreed to work closely with HKSA and avoid duplication
in regulating professional accountants.
||The Administration is also making
a push for the long term debt market by issuing fixed interest
||Welfare Services Panel:
||The Panel held 3 meetings; the Social
Welfare Services Development Fund was discussed on 13 March
1998. On 1 April 1998, at the request of the Hong Kong Council
of Social Service, I sponsored a motion debate and urged the
Government to ensure, through adequate funding in coming years,
that planned social welfare services would not be disrupted
especially if the expected period of economic downturn materialized.
||The Panel held 2 meetings. No item
of significant interest to HKSA was discussed.
||Finance Committee and House Committee:
||3 meetings of the Finance Committee
and 7 meetings of the House Committee were held. I insisted
on a proper procedure for considering the $6.4 billion paid
the Hong Kong Telecom (HKT): I suggested scrutinising the Bill
further before approving payment and hearing representations
from interested parties. Although the Finance Committee did,
in the end, vote the funds through, pressures asserted in the
questioning process forced both the Government and HKT to publicly
make important pledges regarding future openness in discussing
III. Bill Committees Joined
||Provident Fund Schemes Legislation
||Although I did not formally join
the Bills Committee, I did follow the progress of the Bill very
closely when it was suggested by HKSA that problems could be
caused by many of the proposed changes to the Bill.
||Through intense lobbying, I succeed,
with the support of the Bills Committee Chairman, in reopening
with the MPF office some of the more problematic issues. After
two weeks of work and close liaison between HKSA and the MPF
office, numerous amendments were hammered out and agreed on
by the two sides. By the time the Bill was passed on 25 February
1998, HKSA was basically satisfied with the final product and
with provisions regarding accounts, auditing and voluntary liquidation.
Further detail rules on Court Wind up procedures may still need
to be worked out.
||The controversial MPF Bill was finally
passed with a tiny margin and with the full support of independent
||Stamp Duty (Amendment) 1998 Bill:
||On 13 February 1998, I was elected
Chairman of this Bill which is part of the Budgetary recommendations.
HKSA submissions are awaited on certain non-Budgetary issues
i.e. anti-avoidance measures on electronic share transactions
||Inland Revenue (Amendment) 1998 Bill:
||On 16 March 1998, I voiced some initial
observations about the open ended nature of the Bill; the Bill
includes four clauses giving the Commissioner of Inland Revenue
wide discretion regarding the deduction for Home Mortgage Loan
||Agreement on Relief of Double Taxation
||On 16 March 1998, I was elected Chairman
of the working group which will examine the Agreement on relief
of double taxation with China. I have already made several observations
to resolve possible differences between HKSAR and China Tax
Authorities on the interpretation of permanent establishment,
controls, split service contracts, existing 50% profit taxation
as well as other issues.
||Although the Working Group has already
agreed, since no amendment is possible, to proceed with the
endorsement of the Memorandum of Understanding as it presently
stands, it will hold a further meeting on the 24th of March
to hear HKSA as well as other submissions. It will then convey
these submissions to the Administration and request specific
promises of follow-up.
IV. Motion Debates
List attached as Appendix II - The Highlights of speeches will
be published in my circular to members.
V. General Political Background
With election preparations in full swing, the Government is likely
to benefit from some temporary breathing space. It cannot afford
however to be caught off guard; the smallest mistake could be blown
up by political parties and candidates who will, during the coming
weeks, be craving for publicity to help their own election campaigns.