Question No. 2
The Hon. Miss Lydia Dunn, JP
Will the Government
(a)
explain why the actual surplus in the accounts for the financial year 1976-77 is over $902 million rather than $850 million predicted by the Financial Secretary in his budget speech this year
(b) state whether this larger than predicted
surplus has any implications for budgetary policy in 1977-78.
REPLY BY THE FINANCIAL SECRETARY IN
LEGISLATIVE COUNCIL ON WEDNESDAY, 13TH JULY, 1977
2.
Yes, Sir,
.
As regards the first part of Miss Dunn's question: my prediction of a surplus of $850 million was based on the state of the Treasury's cash book at 16th February, a fortnight before Budget Day. This prediction was based on a forecast of expenditure at $6,600 million and of revenue at $7,450 million. In the event, actual expenditure for 1976-77 turned out to be $6,591 million, that is lower than my prediction by only
$9 million, an error of 0.1% only. Actual revenue turned out to be $7,494 million or $44 million more than my prediction of $7,450 million, an error of 0.6% only. This error is accounted for by higher than expected yields from bets and sweeps tax and from earnings and profits taxes. I cannot explain away human frailty, but I can offer a part explanation for the higher than predicted yield from earnings and profits taxes: some 90,000 salaries taxpayers met their liabilities in full before 31st March 1977 instead of taking advantage of the instalment system which allows them to defer one quarter of their liabilities.
3.
As regards the second part of the question: paragraphs 105 to 107 of my Budget Speech defined the relationship which our fiscal reserves should bear to General Revenue Account expenditure. The slightly larger than predicted surplus put
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