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HONG KONG LEGISLATIVE COUNCIL · 14 July 1988
1905
Sir, I think everybody will agree that all economic systems change and evolve with time, and so we must take this into account in drafting law. If we are too inflexible, regulations will stifle economic developments.
Article IV of the draft Basic Law says that socialist systems and policies shall not be practised in the HKSAR and the existing capitalist system and way of life shall not be changed for 50 years. I think that this is most appropriate as an article expounding our economic principles. The reason is simple. Only if the capitalist system in Hong Kong is to be continued can we speak of any economic future.
On public finance and taxation, Sir, I think we have too many policy articles in this chapter. Miss DUNN spoke most eloquently yesterday on this, and Mr. WONG Po-yun has also given us some very valid remarks on this. But today I would also like to go into the details.
We have a lot of articles concerning principles, such as determing expenditure according to revenue and maintaining a basic balance or maintaining a low tax policy. I do not think we should have these policy articles included in the Basic Law. I think we can consider Miss Maria TAM's suggestion, that is that we can have all these articles contained in an annex and treat them a instructive articles.
Sir, Hong Kong is a very small economic entity. For many years the Hong Kong Government has run the finances of Hong Kong according to the principle of a low tax system, a balanced Budget, the avoidance of a deficit, and avoidance of debt. But the most important thing is that the Legislative Council should understand clearly what the fiscal target and criteria are, since it has the right to reject a Budget and it has the power to monitor the Budget. So as long as we have an established and sound system we really need not be too worried about loosing control over our Budget. If we use inflexible or dogmatic promotion in the Basic Law to control our fiscal policies, that will be sacrificing our flexibility and adaptability. In fact, under certain economic circumstances, the Government may have to revise our taxation system or even to adopt a deficit Budget. We have no reason to rule out such possibilities.
I think all we have to do is to retain articles 104, 106 and 108, and we will be able to abide by the Joint Declaration and this is clear and direct. As for articles 105 and 107, I think these will be imposing an invisible bondage on the political system of the Hong Kong SAR, so I think we should consider scrapping these two articles.
Sir, as for maintaining the position of an international monetary centre in Hong Kong, the draft Basic Law suggests in article 109 that the Hong Kong SAR shall create conditions and take measures for the maintenance of such a status. I think these are administrative suggestions. It is simply impossible for us to predict what would happen in our monitoring environment in the coming 50 years, and if we are to request the Hong Kong SAR to use administrative means to maintain such a policy even if we have changes in the objective