XN000022-1984-03-28 — Page 13

WEDNESDAY, MARCH 28, 1984

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+ BUT I DO NOT BELIEVE THAT IT SHOULD BE DONE BY RAISING TAX RATES ANY FURTHER IN THE NEAR FUTURE, IF EVER, LET ALONE BY ALTERING THE AMBIT OF THE CHARGE.

+OUR DIRECT TAX SYSTEM IS ALREADY BEGINNING TO LOSE MUCH OF ITS SIMPLICITY AND WE HAVE ALREADY HAD SOME UNHAPPY EXPERIENCE OF THE WORKING OF THE LAW OF DIMINISHING RETURNS, SHE NOTED.

SHE MAINTAINED THAT WE MUST GET BACK TO CUTTING OUR COAT ACCORDING TO OUR CLOTH-WE MUST REDUCE EXPENDITURE.

+THE GOVERNMENT SHOULD PUT BEFORE THIS COUNCIL THE MEASURES NECESSARY TO START SUCH A PROCESS, SHE SAID.

+ I BELIEVE THAT WE CANNOT NOW AFFORD TO TREAT AS SACROSANCT PROGRAMMES THAT WERE DEVISED AND ACCEPTED IN MORE PROSPEROUS TIMES,+ SHE ADDED.

SHE CITED THE TOTAL ESTIMATE FOR PUBLIC SECTOR EXPENDITURE ON BUILDING AND CONSTRUCTION, INCLUDING CIVIL ENGINEERING, FOR 1984-85 AS AN EXAMPLE.

SHE NOTED THE ESTIMATE WAS WITHIN THREE PER CENT OF THE REVISED ESTIMATE FOR 1983-84, BUT SINCE THE TENDER PRICE INDEX WAS ESTIMATED TO HAVE FALLEN BY A FURTHER 12 PER CENT IN 1983-84, THIS IMPLIED AN INCREASE IN REAL TERMS FOR 1984-85.

SHE ASKED IS IT SENSIBLE TO ACCELERATE EXPENDITURE WHEN WE ARE FACING ANOTHER DEFICIT? WOULD IT NOT BE MORE PRUDENT TO SLOW DOWN UNTIL OUR PROSPECTS IMPROVE AGAIN?+

ELABORATING ON THE IMPORTANCE OF REDUCING EXPENDITURE RATHER THAN INCREASING TAXATION, MISS DUNN SAID, OUR RATES OF DIRECT TAX MAY STILL SEEM LOW, BUT I AM NOT SURE THAT, AT THE RATES NOW PROPOSED, THEY WOULD STILL SEEM SO WHEN COMPARED WITH EFFECTIVE RATES IN OTHER COUNTRIES.+

+IN MANY OF THEM THE OPPORTUNITIES FOR LEGAL TAX AVOIDANCE GREATLY REDUCE THE ACTUAL LIABILITIES OF CORPORATIONS AND

INDIVIDUALS, SHE OBSERVED.

SHE SAID THAT IF THE PROPOSED INCREASES IN DIRECT TAX RATES WERE PASSED, AN ASSURANCE WAS NEEDED FROM THE FINANCIAL SECRETARY THAT IF ESTIMATED EXPENDITURE FOR 1985-86 COULD NOT BE MET WITHOUT FURTHER TAX INCREASES, THE ESTIMATES WOULD BE CUT.

AS FOR WHICH PROJECT TO FORGO, SHE SAID THAT IT WAS THE RESPONSIBILITY OF THE OFFICIALS CONCERNED TO DECIDE.

+WHEN FINANCIAL