XN000022-1974-03-13 — Page 9

Wednesday, March 13, 1974

HAKE USE OF RESERVES MR. WILFRED WONG TELLS GOVERNMENT

Merits Of Deficit Budgeting Outlined

Hong Kong's budgetary policy should ideally be to go into deficit

and draw on its reserves, according to the Hon. Wilfred Wong.

Speaking during the resumed Budget debate, Mr. Wong said:

"AS

future revenues will be lower and as expenditure will be higher, the

benefit of our large reserves should reach the present generation as well

as the future generation."

He noted that reserves were derived from taxes which came from

the public and as such the public expected the reserves to cushion them

against taxes on rainy days.

"Surely," he added, "reserves are means to an end and not an

end in themselves." They should not be our 'sacred cow'.

Mr. Wong expressed surprise over the Financial Secretary's

statement that there can be no question of our compounding our future

problems by carrying forward a deficit, no matter how small, to the

general revenue balance.

"This statement," Mr. Wong said, "appears to rule out any possibility

of drawing on our reserves and points directly to the probability of

increasing taxation in the future."

But should Hong Kong go into deficit financing taxes need not

be raised, he said. Any tax increase would not only discourage local

enterprise, but also foreign investment which plays a key role in Hong Kong's

financial structure.

In view