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WEDNESDAY, FEBRUARY 27, 1985
+ IT IS HARDLY SURPRISING, THEREFORE, THAT THERE HAS HAD TO BE A STEADY PROCESS OF BUDGETARY ADJUSTMENT. WE ARE BEGINNING NOW TO SEE SUCCESS FOR OUR EFFORTS.
+THE GOVERNMENT HAS CLEARLY CONTINUED TO MOVE FORWARD WITH MAJOR PROGRAMMES, FOR EXAMPLE, EDUCATION, HOSPITALS AND HOUSING. IN PARTICULAR WE SHALL BE PROVIDING NEW HOUSING FOR OVER 700 000 PEOPLE IN THE NEXT FOUR YEARS.
+ THE PERFORMANCE OF OUR ECONOMY IN 1984 WAS VERY GOOD. EXPORTS INCREASED BY 22 PER CENT IN REAL TERMS. THE GROSS DOMESTIC PRODUCT GREW BY 9.6 PER CENT, WHICH IS A REMARKABLE FIGURE GIVEN THE GENERAL BACKGROUND. WITH ALMOST FULL EMPLOYMENT REAL WAGES AGAIN STARTED RISING. WE ALSO SUCCEEDED IN CUTTING THE RATE OF INFLATION FROM 12 PER CENT TO 4.6 PER CENT. IT WILL REMAIN LOW AND SHOULD BE ACCOMPANIED IN 1985 BY ABOUT SEVEN PER CENT GDP GROWTH.
+THE BUDGET DEFICIT FOR 1984-85 WILL BE ABOUT $1.8 BILLION. THE OUTCOME IS BETTER THAN 1 FORECAST WHEN I SPOKE TO YOU LAST YEAR. FOR 1985-86 THE DEFICIT IS EXPECTED TO FALL FURTHER TO NOT MORE THAN $1 BILLION. IT IS MY INTENTION FOR 1986-87 TO RETURN TO BALANCED BUDGETS. THERE CANNOT, HOWEVER, BE FIRM PROMISES BECAUSE WE CAN BE SERIOUSLY AFFECTED BY EXTERNAL EVENTS OVER WHICH WE HAVE NO CONTROL. THIS IS THE REASON WHY WE HAVE TO BE CONSERVATIVE IN OUR FINANCES.
+ IN 1985-86 WE NEED TO RAISE A NET $1.2 BILLION IN ADDITIONAL REVENUE. I HAVE PROPOSED NO INCREASE IN DIRECT TAXATION BUT A SERIES OF CAREFULLY SELECTED INCREASES IN INDIRECT TAXES, LICENCES, DUTIES, FEES AND CHARGES. IN THE MAIN I SEEK TO MAINTAIN THE REVENUE YIELD IN REAL TERMS, REMEMBERING THAT THERE HAS BEEN 18 PER CENT INFLATION OVER THE PAST TWO YEARS. I ALSO RECOGNISE THE TAX BURDENS BORNE BY MOTORISTS. MY PROPOSALS IN THIS AREA THEREFORE CALLED FOR AN INCREASE OF ONLY 10 PER CENT.
+IN ADDITION I HAVE PROPOSED THE REINTRODUCTION OF TWO EARLIER MEASURES OF INDIRECT TAXATION: ON SOFT DRINKS AND COSMETICS. I THINK THAT MOST PEOPLE WILL AGREE THAT THESE ARE NOT ESSENTIALS. IT IS ALSO NECESSARY TO CUT BACK ON CONCESSIONS WITH REGARD TO TOBACCO AND DRINK BROUGHT BACK BY HONG KONG RESIDENTS RETURNING FROM ABROAD. THE PRESENT SITUATION IS BEING ABUSED.
+ IN FULFILMENT OF EARLIER PROMISES I HAVE PROPOSED CONCESSIONS ON PERSONAL TAXES FOR THE MOST DESERVING TAXPAYERS. THESE WILL COST $150 MILLION NEXT YEAR AND $210 MILLION IN A FULL YEAR.
+CLEARLY THERE IS A NEED FOR MAJOR SPENDING IN MANY AREAS IN THE YEARS AHEAD. THE REVENUE TO PROVIDE FOR THIS SHOULD FLOW FROM HONG KONG'S INCREASING PROSPERITY, AND WE SHOULD SOON ENJOY BALANCED BUDGETS.
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