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WEDNESDAY, MAY 6, 1992
FIGURES FOR THE FINAL CLOSING OF THE GOVERNMENT'S ACCOUNTS WILL NOT BE AVAILABLE UNTIL THE SECOND PART OF MAY. THESE MAY VARY SLIGHTLY FROM THE FIRST CLOSING FIGURES. BUT IT IS CLEAR THAT WE NOW HAVE AN UNEXPECTED WINDFALL. I THOUGHT IT PROPER BOTH TO INFORM MEMBERS OF THIS, ALTHOUGH THE FIGURES ARE NOT FINAL; AND SINCE THE CHANGE IS SO SIGNIFICANT, TO REVIEW MY REVENUE PROPOSALS ACCORDINGLY.
LOOKING AT THE FIVE-YEAR PERIOD COVERED BY THE MEDIUM RANGE FORECAST, AND ALLOWING FOR INTEREST ON THIS ADDITIONAL SURPLUS, OUR ACCUMULATED RESERVES BY 1996-97 WILL BE MORE THAN $7 BILLION HIGHER THAN WE HAD PREVIOUSLY FORECAST AND OF PARTICULAR RELEVANCE, $7 BILLION HIGHER THAN THE FORECAST AVAILABLE AT THE TIME OF MY BUDGET.
AND COULD NOT HAVE BEEN
THIS DEVELOPMENT WAS NOT
FORESEEN, BUT IT IS VERY WELCOME NEVERTHELESS, IT WILL ENABLE US TO CONTINUE WITH OUR PLANNED INCREASES IN EXPENDITURE; TO FUND THE PROPOSED TAX CONCESSIONS; AND TO MAINTAIN AN ADEQUATE "CUSHION" OF RESERVES. AT THE SAME TIME IT NO LONGER SEEMS NECESSARY TO RAISE ADDITIONAL REVENUE ON THE SCALE I HAD ORIGINALLY PLANNED.
THE AMOUNT OF THE RESULTING INCREASE IN OUR PROJECTED RESERVES IS, AS IT HAPPENS, ROUGHLY EQUIVALENT TO THE AMOUNT WHICH I HAD INTENDED TO RAISE BY INCREASING RATES BY HALF OF ONE PERCENTAGE POINT, I AM PLEASED TO ANNOUNCE THAT, UNDER THESE CHANGED CIRCUMSTANCES, THE ADMINISTRATION DOES NOT NEED TO PROCEED WITH AN INCREASE то THE GENERAL RATES POUNDAGE THIS YEAR, ASSUMING OF COURSE THAT THE OTHER REVENUE MEASURES ARE AGREED. FOR THIS REASON, I WILL NOT BE INTRODUCING INTO THIS COUNCIL A RESOLUTION TO INCREASE RATES IN THE CONTEXT OF THIS BUDGET. ACCORDINGLY, APPROPRIATE ADJUSTMENTS WILL BE MADE TO SUBSEQUENT RATES DEMANDS. RATES, AS A STABLE AND PROGRESSIVE FORM OF TAXATION, WILL NEVERTHELESS CONTINUE TO MAKE AN IMPORTANT CONTRIBUTION TO GENERAL REVENUE.
THE FACT THAT WE CAN NOW DO WITHOUT A RATES INCREASE IS CLEARLY GOOD NEWS ΤΟ THE PUBLIC AS WELL AS TO THE ADMINISTRATION. NEVERTHELESS, IT RAISES THE QUESTION OF HOW THE UNDER-ESTIMATION CAME ABOUT. THERE ARE TWO MAIN REASONS.
FIRST, REVENUE FROM STAMP DUTY, SALARIES AND PROFITS TAX AND FIRST REGISTRATION TAX HAVE BEEN HIGHER THAN EXPECTED, WITH THE RESULT THAT TOTAL REVENUE IS $2.3 BILLION ABOVE THE REVISED ESTIMATE.
SECONDLY, SPENDING ON PUBLIC WORKS IS EXPECTED TO BE $3 BILLION THE REVISED ESTIMATE, AS A RESULT OF FURTHER SLIPPAGE IN THE CAPITAL WORKS PROGRAMME.
BELOW
THE DIFFERENCE BETWEEN THE FIRST CLOSING FIGURE AND THE REVISED ESTIMATE FIGURE FOR REVENUE IS ONLY 2%. REVENUE YIELDS ARE AFFECTED BY ECONOMIC FACTORS AND CANNOT BE PRECISELY FORECAST. RECENT ACTIVITY IN THE STOCK MARKET AND RELATIVELY HIGH PROPERTY PRICES HAVE, FOR EXAMPLE, CONTRIBUTED TO THE INCREASED REVENUE FROM STAMP DUTY.
/BY CONTRAST