WEDNESDAY, FBRUARY 28, 1979
3
+SO A SINGLE TAXPAYER WILL CONTINUE TO ENJOY THE BENEFIT OF THE ALLOWANCE UNTIL HIS INCOME REACHES $37,500 AS OPPOSED TO $29,167 NOW AND A MARRIED TAXPAYER WILL CONTINUE TO ENJOY THE BENEFIT OF THE ALLOWANCE UNTIL HIS INCOME REACHES $75,000 AS OPPOSED TO $58,334.
IN ADDITION, THE TOP MARGINAL RATE OF SALARIES TAX OF 30 PER CENT IS TO BE ABOLISHED. THIS WILL HAVE THE EFFECT OF PUSHING FORWARD THE POINT-AT-WHICH-A SINGLE TAXPAYER PAYS THE STANDARD RATE OF 15 PER CENT FROM $70,000 TO $75,000- AND WILL PUSH FORWARD THE POINT AT WHICH A MARRIED TAXPAYER WITH, SAY, TWO CHILDREN PAYS THE STANDARD RATE OF 15 PER CENT FROM $104,000 TO $117,500.
+THE MAIN PURPOSE OF THESE TWO CHANGES IS TO REDUCE THE TAX BURDEN OF TAXPAYERS IN WHAT IS LOOSELY DESCRIBED AS THE MIDDLE-INCOME RANGE.
+FOR THE VERY NECESSARY ECONOMIC REASONS I HAVE ALREADY EXPLAINED, I HAD TO OFFSET THE LOSS OF REVENUE INVOLVED IN THESE THREE TAX CONCESSIONS.
+I DID THIS BY PROPOSING INCREASES IN THE FIRST REGISTRATION TAX ON PRIVATE CARS AND MOTORCYCLES AND INCREASES IN ANNUAL LICENCE FEES PAYABLE IN RESPECT OF ALL MOTOR VEHICLES, OTHER THAN PUBLIC SERVICE VEHICLES.
+I ALSO PROPOSED SMALL INCREASES IN BUSINESS REGISTRATION FEES AND IN THE BUOY AND ANCHORAGE FEES PAYABLE BY SHIPS.
+SO MUCH FOR THE BUDGET ITSELF AND THE GOVERNMENT'S CONTRIBUTION TO STABILISING THE ECONOMY. PUBLIC SECTOR DEMAND IS ONLY ONE COMPONENT OF DOMESTIC DEMAND AND SO, IF TOTAL DOMESTIC DEMAND IS TO BE SLOWED DOWN SUFFICIENTLY, THE GROWTH RATE OF PRIVATE DOMESTIC DEMAND MUST BE SLOWED DOWN ALSO.
+IN OTHER WORDS, WE MUST FIRST SEEK TO INFLUENCE THE ABILITY OF THE BANKING SYSTEM TO CREATE CREDIT. THUS I ANNOUNCED THIS AFTERNOON THAT THE GOVERNMENT INTENDS TO REDUCE THE EXTENT TO WHICH ITS OWN HONG KONG DOLLAR BALANCES CAN BE USED TO GENERATE CREDIT. PRIOR TO THE FLOATING OF THE HONG KONG DOLLAR IT WAS RELATIVELY SIMPLE FOR US TO DO THIS, BUT THIS IS NO LONGER THE CASE.
+AND, SECONDLY, WE MUST DIMINISH THE DEMAND FOR LOANS AND ADVANCES. MY UNDERSTANDING CERTAINLY IS THAT WE SHALL SEE BANKS ALTERING THE IR LENDING RATES MORE FREQUENTLY AND ADOPTING A MORE SELECTIVE ATTITUDE AS BETWEEN DIFFERENT CATEGORIES OF BORROWERS.
+1 AM CONFIDENT THAT HIGHER INTEREST RATES AND A MORE SELECTIVE ATTITUDE BY BANKS TOWARDS WOULD-BE BORROWERS WILL EVENTUALLY SLOW DOWN THE GROWTH RATE OF LOANS AND ADVANCES.
+THIS COMBINED WITH ACTION TO REDUCE THE CREDIT CREATION POTENTIAL OF THE GOVERNMENT'S OWN HONG KONG DOLLAR BALANCES AND THE LIMITATION ON THE GROWTH RATE OF PUBLIC EXPENDITURE IN THE NEW FINANCIAL YEAR SHOULD BRING THE DEMAND FOR AND THE SUPPLY OF REAL RESOURCES WITHIN THE ECONOMY MORE CLOSELY INTO BALANCE.
+THUS I BELIEVE THAT THE INFLATIONARY PRESSURES WHICH AT THE MOMENT THREATEN OUR STABILITY AND, THEREFORE, OUR GROWTH PROSPECTS, WILL BE CONTAINED.+