or both parents working, which is an outcome of the trend of increase in labor force participation. the picture is essentially of workers whose earning power does not allow them a respectable livelihood, and so there is an increase in the number of poor families in which there are one or two wage - earners. in this context, expanding the earned income tax credit ( negative income tax ) is an efficient policy tool to deal with the problem, as it focuses on the working poor, and in contrast to a policy of allowances, it does not contain negative incentives. in the long term, of course, the main key to solving the problem of poverty is continued investment in education and increasing earning power. the challenges i have presented here will require a significant increase of civilian expenditure on services such as education, healthcare, welfare, and infrastructure, even if only to maintain the current level of services, given the expected changes in composition of the population. in order to ensure that maintaining the civilian expenditure level will not negatively impact on the important effort to continue to reduce the debt burden, there will be a need to continue to increase tax revenues. this can be achieved in 3 ways, each on its own or in some combination of the three : 1. increasing tax rates, which obviously increases the burden on activity and growth. 2. reassessing the tax exemption system. in this regard, it should be remembered that some of the estimates of the cost of existing exemptions are biased upward, since they do not take into account the expected change in activity resulting from the cancellation of the exemption. 3. reducing the shadow economy and enhancing collection. it is clear that from the perspective of statistics bureaus worldwide, estimating the extent of the unreported economy poses a large challenge. a very rough estimate by the world bank, which apparently has a large margin of error, assesses that the unreported economy is about 20 percent of gdp in israel. in this regard, there are several processes which are being discussed : definition, in legislation, of severe tax crimes as source crimes under the prohibition on money laundering law, which would allow the transfer of information between the israel money laundering and terror financing prohibition authority and the israel tax authority, and making punishment for tax crimes more severe ; collaboration between all the enforcement entities and transfer of professional and intelligence information which will make enforcement against tax evaders more efficient ; and a reduction in the use of cash and third - party checks, which is currently being considered by the locker

norman chan : sound banking closing remarks by mr norman t l chan, chief executive of the hong kong monetary authority, at the hkma conference for independent non - executive directors ( ineds ), hong kong, 16 march 2017. * * * what is sound banking? sound banking is not ( a ) excessive risk taking ; ( b ) irresponsible or unfair treatment of customers and counter - parties ; and ( c ) maximisation of short term profits. sound banking is : ( a ) prudent and profitable ; ( b ) responsible and fair to customers ; and ( c ) sustainable. trilogy of sound banking ( i ) robust regulation and supervision – it will provide an externally imposed set of rules and codes that define what is acceptable and what is not. however, no matter how well designed and robust the regulatory regime is, it normally works better in setting minimum standards for compliance and is not so effective in promoting good or best practices. ( ii ) good corporate culture – culture consists of a set of formal and informal values that guide the mindsets and behaviours of management and staff. unlike externally imposed rules and regulations, which normally entail sanctions if breaches are detected, good corporate culture and values reflect the attitude that “ we do things the right way not because we are afraid of being caught but because this is the way it ought to be done ”. a simple illustration of the importance of culture and values is the example of combatting littering on the streets. it is a lot easier to ensure that our streets are clean when people don ’ t think it is morally right to litter rather than having thousands of street cleaners sweeping the streets day and night, or having thousands of health inspectors giving out penalty tickets to those who litter. ( iii ) appropriate incentives system – it refers mostly to financial incentives but there could be non - financial incentives, that accrue to the staff members at different levels within a bank. it is crucial that the incentive system aligns with the letter and spirit of the rules, codes and culture statement of the bank in order to induce the appropriate staff behaviour to produce the desired outcomes consistently over time. it is not possible to achieve sound banking without all the three components, as they tend to support and reinforce each other. quoting the famous words of mencius, supplemented by a modern economics overlay, i would like to conclude today ’ s conference with the following phrases : [UNK] [UNK] 不 [UNK] [UNK] [UNK] 政 [UNK] 法 不 [UNK] [UNK] [UNK] 行 1