XN000022-1986-02-26 — Page 33

-

18

WEDNESDAY, FEBRUARY 26, 1986

A SLIGHT UPTURN WAS EXPECTED IN 1986 AS A RESULT OF THE EFFECTS ON IMPORTS OF THE DROP IN THE VALUE OF THE U.S. DOLLAR, TO WHICH REPRESENTING LONG TERM GOVERNMENT POLICY THE HONG KONG DOLLAR WAS FIRMLY LINKED AND WOULD REMAIN LINKED.

SIR JOHN SAID THE FALL IN THE TRADE WEIGHTED INDEX OF THE HONG KONG DOLLAR SHOULD, HOWEVER, BE OF ASSISTANCE IN EXPORT MARKETS. MOREOVER, THE CURRENT PRIME RATE OF SEVEN PER CENT HAD BEEN UNCHANGED FOR SIX MONTHS, AND WAS LOW BY COMPARISON WITH OTHERS, FOR EXAMPLE IN THE UNITED STATES, THE UNITED KINGDOM AND AUSTRALIA.

REFERRING TO EMPLOYMENT, SIR JOHN SAID: +AS I THINK YOU ALL KNOW, THE GOVERNMENT HAS ALWAYS ATTACHED GREAT IMPORTANCE TO OUR UNEMPLOYMENT FIGURES. IT REMAINS SATISFACTORY THAT WE HAVE IN EFFECT FULL EMPLOYMENT IN HONG KONG WITH REAL WAGES INCREASING MODERATELY. APART FROM IMPORTANT SOCIAL ISSUES, CLEARLY CONSIDERABLE UNEMPLOYMENT WOULD REQUIRE AN APPRECIABLE INCREASE IN PUBLIC ASSISTANCE IN PARTICULAR+.

-

MORE SALARIES TAX ALLOWANCE PROPOSED

*****

REVENUE PROPOSALS FOR 1986-87 INCLUDE FURTHER INCREASES IN SALARIES TAX ALLOWANCES, A SMALL AMENDMENT TO ESTATE DUTY AND REMOVAL OF THE UNPOPULAR 1984 OVERSEAS INTEREST TAX PROVISIONS, THE FINANCIAL SECRETARY, SIR JOHN BREMRIDGE, SAID TODAY.

THERE WOULD BE MODERATE ADJUSTMENTS IN SOME LICENCE FEES, DUTIES AND CHARGES, BUT OVERALL IN MONEY NOT IN REAL TERMS, AND DESIGNED TO MAINTAIN REAL REVENUE YIELDS.

+I BELIEVE THAT THESE PROPOSALS WILL PROVE TO BE SENSITIVE TO THE SITUATION IN WHICH WE ALL ACTUALLY LIVE, THOUGH THEY CANNOT EXPECT UNIVERSAL APPROVAL+, SIR JOHN SAID.

+THEY ACTUALLY CUT EXPECTED REVENUE BY $40 MILLION NEXT FINANCIAL YEAR IN MONEY TERMS. I HOPE THAT THIS BUDGET MAY MARK THE END OF REGULAR REAL TAX INCREASES+.

SIR JOHN REMINDED MEMBERS AGAIN OF THE POSSIBLE YIELDS FROM INCREASES IN DIRECT TAXATION, WHICH HE +CERTAINLY DID NOT RECOMMEND+. HE SAID HIS VIEW HAD NOT CHANGED FROM HIS BUDGET STATEMENT LAST YEAR THAT ENTERPRISE AND HARD WORK ARE STIMULATED BY LOW DIRECT TAXATION AND BY CONFIDENCE THAT IT WILL REMAIN LOW.+

SORINATE

/SIR JOHN