UNCLASSIFIED
UNCLASSIFIED
FM BTC HONG KONG (AMENDED DISTRIBUTION
TO PRIORITY INTRA
TELNO INTRA 52
OF 05100OZ MARCH 92
INFO PRIORITY FCO, ECGD, PEKING
TOP COPY
6
143403
MDLIAN 9318
Q DIST ? MAB /00/2
5/3/92)
Pa
613
دل
MIPT
REACTIONS TO 1992/93 HONG KONG BUDGET
1.
MOST COMMENTATORS HAVE FOCUSSED ON THE PROPOSALS RELATING TO THE FINANCIAL RESERVES AND THE TAX INCREASES AND CONCESSIONS. HONG KONG BANK DEPUTY CHAIRMAN, MR JOHN GRAY SAID THE FINANCIAL SECRETARY HAD BEEN CAREFUL NOT TO ADD TO INFLATION IN WHAT HE THOUGHT WAS A QUOTE FAIR AND REASONABLE PLAN UNQUOTE. MOST AGREE THAT THE BUDGET IS CONSERVATIVE AND AN ATTEMPT TO GUARD AGAINST FUTURE UNCERTAINTIES. THE INCREASES IN PERSONAL ALLOWANCES AND CORPORATE TAX HAVE ATTRACTED THE MOST CRITICISM. THE FORMER ON THE GROUNDS THAT THE INCREASE WAS TOO LITTLE AND THE LATTER BECAUSE IT WAS TOO MUCH (IT HAD BEEN WIDELY RUMOURED BEFOREHAND THAT THE INCREASE IN PROFIT TAX WOULD ONLY BE HALF A PER CENT) SOME COMMENTATORS HAVE SUGGESTED THAT IN VIEW OF THE EXPECTED SURPLUSES NO TAXES INCREASES WERE JUSTIFIED.
2. CRITICS OF THE BUDGET HAVE ALSO EXPRESSED SURPRISE THAT MEASURES WERE NOT INTRODUCED TO LIMIT THE INCREASE IN PUBLIC SPENDING IN 1992/93 TO A LEVEL BELOW THE CURRENT INFLATION RATE PLUS THE REAL GROWTH RATE, TO REDUCE INFLATION PRESSURES.
3
BOTH THE HONG KONG GENERAL CHAMBER OF COMMERCE AND THE CHINESE MANUFACTURERS ASSOCIATION OF HONG KONG WERE DISAPPOINTED TO SEE THE INCREASE IN PROFITS TAX COMMENTING THAT THIS UNNECESSARILY FLIES IN THE FACE OF REGIONAL AS WELL AS INTERNATIONAL TRENDS AND MAINTAINS HONG KONG'S OVER-RELIANCE ON DIRECT TAXES. PROPERTY RATE INCREASES WHICH WILL RESULT IN A MONTHLY INCREASE OF HK DOLLARS 45 FOR THE AVERAGE PRIVATE FLAT AND AN AVERAGE 2.4 PERCENT INCREASE PER SQUARE FOOT FOR OFFICE PREMISES. THE UNITED DEMOCRATS BELIEVE THE INCREASES IN PERSONAL TAX ALLOWANCES TO BE TOO SMALL: THIS WAS ECHOED BY THE FEDERATION OF TRADE UNIONS. SOME LEGCO MEMBERS HAVE STRESSED THE IMPORTANCE (AND PRUDENCE) OF BUILDING UP RESERVES.
4.
THE TOBACCO INSTITUTE SEEMS TO HAVE ACCEPTED THAT THE 10 PER CENT
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