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12
THURSDAY, MARCH 5, 1992
THE
QUESTION:
I WANT TO ASK SOMETHING ABOUT THE EXPENDITURE AND THE INFLATION. IN YOUR NEW BUDGET THE EXPENDITURE IN THE NEXT FINANCIAL YEAR IS MUCH HIGHER THAN LAST
YEAR, IT IS ABOUT A 5% INCREASE IN REAL TERMS, BUT WHEN WE COMPARE WITH REVISED ESTIMATE WITHIN THIS YEAR AND NEXT YEAR, THE INCREASE IN TERMS WILL RISE OVER 10%. DO YOU THINK SUCH EXPENDITURE INFLATION HIGHER?
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REAL WILL MAKE
FINANCIAL SECRETARY:
I HAVE TO SAY, NO. WHY DO I HAVE TO SAY, NO? THE MAIN REASON IS THAT OVER A PERIOD WE ARE KEEPING OUR EXPENDITURE GROWTH IN LINE WITH THE ECONOMIC GROWTH. WE CAN'T ACTUALLY JUGGLE TOO MUCH ACCORDING TO THE REVISED ESTIMATES. I MEAN IT HAPPENS THAT THERE WAS CONSIDERABLE UNDER-SPENDING LAST YEAR. WE CAN'T ACTUALLY SUDDENLY WE ARE LIKE AN OCEAN-LINER WE CAN'T SUDDENLY REDUCE EXPENDITURE TO REFLECT THAT TEMPORARY BLIP, SO WE WORK ON THE TREND. BUT GOVERNMENT SPENDING AS A PROPORTION OF GDP IS STILL RATHER MODEST, DEPENDING WHICH WAY YOU MEASURE IT SOMEWHERE BETWEEN 11% AND 18%, THE TWO FIGURES ARE IN THE SPEECH EVEN MOST ECONOMISTS AGREE THAT UNLESS THERE IS A VERY MAJOR SHIFT IN THE TREND OF OUR EXPENDITURE, IT DOES NOT HAVE A SIGNIFICANT EFFECT ON INFLATION. AND THE OFFSETTING POINT ON THAT IS THAT THE CIVIL SERVICE GROWTH IS KEPT TO ABOUT ZERO, SO THAT IS ACTUALLY HELPFUL THE PRIVATE SECTOR. GIVEN THERE IS A SHORTAGE OF LABOUR. 80 ON BALANCE, IT DOESN'T HAVE MUCH EFFECT EITHER WAY.
QUESTION:
IT'S So
TO
MR MACLEOD, SOME OF YOUR CRITICS HAVE SAID THAT IT IS NOT VERY CLEAR, READING YOUR BUDGET, WHAT KIND OF SIGNAL YOU ARE REALLY TRYING TO SEND OR WHICH SECTOR OF SOCIETY YOU ARE TRYING TO HELP. FIRST YOU TAKE FROM THE RICH CORPORATE CLASS TO GIVE TO THE WORKING CLASS, RIGHT?
THROUGH
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AN INCREASE IN PERSONAL ALLOWANCES, AT THE SAME TIME YOU HIT THE WORKING CLASS WITH AN INCREASE IN PROPERTY RATES. AND THEN YOU TRY ΤΟ SOFTEN THE BLOW FOR THE CORPORATE CLASS THROUGH YOUR REDUCTION IN STAMP-DUTY AND STOCK-TRANSFER AT A TIME WHEN THERE WAS NO SERIOUS LOBBY FOR A CUT IN STAMP-DUTY, AND THEN YOU SAID THAT THROUGH YOUR INCREASE IN PERSONAL ALLOWANCES THERE WILL ACTUALLY BE SOMETHING LIKE 120,000 PEOPLE WHO WOULD NOT HAVE ANY TAX LIABILITY BUT AT THE SAME TIME, BECAUSE OF INCREASING WAGES, YOU ARE ADDING 250,000 MORE OR SOMETHING LIKE THAT, NEW TAXPAYERS THIS YEAR. COULD YOU COMMENT ON THAT?
/FINANCIAL SECRETARY