3
The Economy
government's one-off electricity charge subsidy for households in the latter half of 2014, and the end of rates concession in October.
The GDP deflator increased by 3 per cent in 2014, following the 1.7 per cent increase in 2013 (Chart 14).
Chart 14
-2
Per cent
8
O
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Main Inflation Indicators (year-on-year rate of change)
2
GDP deflator
0
Underlying Composite CP
-4
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
I 2010
2011
2012
2013
2014
Underlying inflation trended lower in 2014, as domestic cost pressures broadly eased and imported inflation remained benign.
Public Finance
Management of Public Finance
The principles underlying the government's management of public finances are enshrined in the Basic Law which stipulates that:
• The Hong Kong Special Administrative Region (HKSAR) shall have independent finances, and shall use its revenues exclusively for its own purposes.
• The HKSAR shall practise an independent taxation system, taking the low tax policy previously pursued in Hong Kong as reference.
• The HKSAR shall follow the principle of keeping expenditure within the limits of revenues in drawing up its budget, and strive to achieve a fiscal balance, avoid deficits and keep the budget commensurate with the growth rate of its GDP.
• The Legislative Council of the HKSAR shall exercise the power to approve taxation and public expenditure.
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