QUESTION:
THURSDAY, MARCH 5, 1992
IT'S YOUR RESPONSIBILITY, OR
THE CIVIL SERVICE BRANCH'S RESPONSIBILITY, TO COMMISSION THIS UNIT OR IS IT SOMETHING OUTSIDE THE EXISTING GOVERNMENT?
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CHIEF CIVIL
FINANCIAL
SECRETARY:
IT WILL BE
SECRETARY
IT REALLY COVERS PRETTY WELL BECAUSE SERVICE, MONEY, EVERYTHING.
UNDER THE EVERYTHING
QUESTION:
COULD I ASK BRIEFLY ABOUT FINANCIAL PLANNING AS WELL, BECAUSE YOU'VE GIVEN US THESE ESTIMATES UP TO 1997 BUT NOT BEYOND? AND ALSO YESTERDAY YOU WERE REFERRING IN
YOUR SPEECH TO THE SAR GOVERNMENT AS A NEW ADMINISTRATION. I MEAN HONG KONG GOVERNMENT HAS ALWAYS EMPHASISED CONTINUITY ACROSS 1997 BUT NOW YOU SEEM TO BE PLANNING PURELY IN TERMS OF UP TO 1997. DO YOU NOW SEE THIS AS YOUR JOB, AS ONLY PLANNING UNTIL THE END OF BRITISH RULE?
FINANCIAL SECRETARY:
NO.
I MEAN WHAT I HAVE ACTUALLY DONE IS TO EXTEND THE PLANNING PERIOD TO COVER 1996-97, NOT ΤΟ SHORTEN IT, AND I AM QUITE SURE AS WE GET NEARER 1997, OUR FINANCIAL FORECASTS, JUST LIKE ALL OUR OTHER FORECASTS, WILL GO BEYOND 1997. BUT I THOUGHT IT WAS NOT TERRIBLY SENSIBLE TO STOP IN 1995-96 WHICH IS WHERE OUR NORMAL PLANNING HORIZON WOULD BE.
QUESTION:
DO YOU RECOGNISE SOME SORT OF DISCONTINUITY IN FINANCIAL PLANNING BECAUSE
FINANCIAL SECRETARY:
WELL THERE IS A DISCONTINUITY IN THE SENSE THAT IT'S QUITE A GOOD ONE IN THE SENSE THAT THE MAIN GOVERNMENT EXPENDITURE ON THE INFRASTRUCTURE WILL HAVE FINISHED BY 1997, AND, AS HAS BEEN SAID, THE LAND FUND WILL COME IN. AND ACTUALLY VARIOUS OTHER FORMS OF REVENUE, I MEAN THE FULL LAND REVENUE WILL THEN GO TO THE GOVERNMENT, SO IT WILL BE IN A VERY GOOD HEALTHY POSITION WHICH WE ARE HAPPY ABOUT, AND OUR MISSION IS TO ENSURE THAT BETWEEN THEN AND NOW, WE MAKE SURE THAT WE ARE ALSO IN A HEALTHY FINANCIAL POSITION. YES, THERE IS A CHANGE OF COURSE THERE IS BUT THERE IS NOTHING SINISTER OR WORRYING ABOUT IT.
QUESTION:
—
YOU MENTIONED, YESTERDAY, THAT THE GAP BETWEEN SALARIES AND PROFITS-TAX RATES IS PROBABLY AT ITS MAXIMUM. CAN THIS BE INTERPRETED AS AN INDICATION THAT SALARIES-TAX COULD BE NEXT TO BE RAISED AND IS THERE ANY DANGER OF THAT?
—
FINANCIAL SECRETARY:
NO, IT IS NOT AN INDICATION I MEAN THIS IS SORT OF AN ENDLESS ASSURANCE, BUT I'D BETTER GIVE IT. WE DON'T HAVE ANY PLANS UP OUR SLEEVES ACTUALLY WE HAVE ONLY JUST FINISHED ONE BUDGET, WE'RE NOT ABOUT TO START PLANNING THE NEXT ONE TOMORROW. WE DON'T HAVE ANY SORT OF HIDDEN PLANS FOR RAISING SALARIES-TAX. ALL I WAS SIGNALING WAS THAT THERE IS A LIMIT то THE EXTENT TO WHICH THE PROFITS-TAX AND SALARIES-TAX RATES CAN BE DIFFERENT. THERE IS A LIMIT BECAUSE AVOIDANCE IS POSSIBLE IF THE DIFFERENCE BECOMES TEMPTING ENOUGH, AND A SMALL COMPANY CAN IN CERTAIN CIRCUMSTANCES DECIDE TO TAKE THE MONEY EITHER IN THE FORM OF MORE SALARY OR IN THE FORM OF A DIVIDEND, AND THEY WILL DO WHICHEVER PRODUCES THE LESS TAX BILL. IF THE DIFFERENCE ISN'T VERY GREAT IT'S NOT WORTH THE HASSLE. IF IT BECOMES GREATER THEN IT IS MORE LIKELY TO HAPPEN. IT'S NOT A BLACK AND WHITE SITUATION, THE AVOIDANCE JUST GETS WORSE AS THE GAP GROWS AND OUR JUDGMENT WAS, THAT'S PROBABLY PRETTY NEAR THE LIMIT, THAT'S ALL.
/QUESTION
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