XN000022-1985-04-17 — Page 6

WEDNESDAY, A. .IL 17, 1985

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UN

PUBLIC SPENDING IS 16 PER CENT OF GDP

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HONG KONG'S PUBLIC SECTOR EXPENDITURE AS A PERCENTAGE OF GDP AT 16 PER CENT, WOULD BE BY FAR THE LOWEST IN THE COMPARABLE WORLD, THE FINANCIAL SECRETARY, THE HON SIR JOHN BREMRIDGE, SAID TODAY.

+THE NEXT LOWEST IS JAPAN AT 34.5 PER CENT, SIR JOHN SAID IN CONCLUDING THE DEBATE ON THE SECOND READING OF THE APPROPRIATION BILL.

+AS A BROAD BRUSH COMMENT, I DO NOT MYSELF BELIEVE THAT OURS CAN REASONABLY GO MUCH LOWER WHILE OUR ECONOMY AND THE CREATION OF WEALTH FLOURISH, THUS GIVING RISE TO GROWING AND ENTIRELY PROPER ASPIRATIONS WITH REGARD TO THE PROVISION OF BETTER CENTRAL SERVICES,

+PRIVATE AFFLUENCE AND PUBLIC SQUALOR SHOULD NOT CO-EXIST. TIME AND AN INCREASINGLY REPRESENTATIVE GOVERNMENT WILL DECIDE,+ SIR JOHN SAID.

THUS HE COULD NOT AGREE WITH SUGGESTIONS FOR BASING THE BUDGET ON REVENUE, SIR JOHN SAID.

EXCEPT IN EMERGENCY, SIGNIFICANT ADDITIONAL CUTS IN CURRENT LEVELS OF GOVERNMENT EXPENDITURE, FOR EXAMPLE ON HOUSING, SOCIAL WELFARE, EDUCATION OR HEALTH WOULD APPEAR UNFAIR AND INDEED UNNECESSARY, HE SAID.

+RESERVES OF TAXABILITY ARGUABLY DO EXIST. I CERTAINLY HOPE THAT IT WILL REMAIN POSSIBLE TO HOLD OUR TAXES AT THEIR LOW CURRENT LEVEL. THIS IS A KEY TO GROWTH. BUT THERE HAS ALSO TO BE A SENSE OF BALANCE AND JUSTICE.

+WHILE OUR OBVIOUS AND GROWING PROSPERITY CONTINUES I DO NOT BELIEVE THAT MANY WOULD SUPPORT CUTTING MAJOR GOVERNMENT PROGRAMMES FURTHER RATHER THAN (IF NECESSARY) MODERATELY INCREASING THE TAX BURDENS OF THOSE WHO CAN BEAR THEM BEST OR WHO ARE REASONABLY GIVEN A CHOICE OF INDIRECT TAXATION.

+TO PROCEED OTHERWISE WOULD ARGUABLY NOT BE FAIR TO THE COMMUNITY AS A WHOLE. NO ONE, HOWEVER, SHOULD CONCLUDE THAT I BELIEVE THAT NEW REAL TAXATION IS INEVITABLE. I DO NOT. IT DEPENDS ON FUTURE CIRCUMSTANCES, THOUGH YIELDS MUST BE MAINTAINED IN REAL TERMS. NOR SHOULD WE DISCARD THE POSSIBILITY OF SOME REDUCTION IN TAXATION. IT MAY SEEM UNLIKELY NOW BUT IT HAS HAPPENED BEFORE, SIR JOHN SAID.

SIR JOHN AGREED WITH THE VIEW ON THE NEED TO RESTRAIN THE GROWTH OF PUBLIC EXPENDITURE AND TO BALANCE THE BUDGET.

/+AS THE