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Hong Kong's textiles exports as may result from this year's renegotiation of the agreement should be allowed to put the fulfilment of social programmes in jeopardy.
3.
The budgetary strategy revealed in Hong Kong's second telegram, in the form of extracts from the Financial Secretary's statement, is disappointing. As I anticipated in paragraph 13 of my previous
submission, it amounts more to a series of guidelines of an account-
ancy or housekeeping nature than to a proper strategy. What is missing is a recognition and elaboration of the economic and social policies already announced by the Governor last October, together with a statement of their economic and fiscal implications expressed in terms of economic growth, the effects on income and prices, exports and imports, etc.
4. The "strategy" contains a number of guidelines within which the budget has been drawn up (see, in particular, the paragraphs numbered 93-97 and 103-105 in Hong Kong telegram no. 193). It is as though the Financial Secretary has felt obliged to try to put every possible variable in some pre-determined relationship with every other variable. It could be argued that the establishment of such guidelines is not consistent with what Lord Goronwy-Roberts said at his meeting with the Governor and the Financial Secretary on 9 December last that the "public expression of firm criteria for fiscal policy was counter-productive" and that there was to be "no public setting down of certain principles or constraints" (item 2, paragraph 6(c) of the record refers). On the other hand, it seems that the Financial Secretary regards guidelines as constituting part of his strategy, such as it is, and some at least of the guidelines now presented do point in a satisfactory direction, e.g. that revenue is to be raised as equitably as possible between particular classes and groups of tax-payers or potential tax-payers (see the paragraph numbered 91 in Hong Kong telegram no. 193).
A further criticism might be that there is no mention of any intention to introduce new arrangements for salaries and company taxation, though we know that the report of the Inland Revenue Review
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