1
17
(e)
Management of Public Finances
33.
In managing the public finances the Government tries essentially to act like a prudent housekeeper. It is quite rightly an article of faith that we should seek to raise revenues in ways that are efficient and which do not act as a brake on the growth of the economy by blunting the incentives to effort, enterprise, investment and innovation on which our economic growth essentially depends. Hong Kong has learned by experience that relatively modest levels of taxation, which are capable of being collected, produce more revenue in the long run than higher and
more onerous rates since they give encouragement to economic expansion. This low tax philosophy will continue to be our guide.
34.
On the expenditure side, the Government aims to ensure that public spending does not exceed a reasonable and prudent share of the Gross Domestic Product and that its growth should, as far as possible, not exceed the growth rate of the GDP. This means that, in order to maintain and develop our programmes and services in difficult years, it is necessary in the good years of rapid economic growth to run surpluses and to put money aside. This lesson was brought home sharply during the deficit years, from 1982 to 1985, when we had to call on our reserves to maintain the existing level of services.
/(i) Current