XN000022-1986-03-26 — Page 12

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WEDNESDAY, MARCH 26, 1956

SENSIBLE BUDGETARY PHILOSOPHY AND GUIDELINES

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THE BUDGETARY PHILOSOPHY AND GUIDELINES, WHICH ARE BASED

ON THE PARAMOUNT OBJECTIVE OF MAINTAINING STABILITY AND PROSPERITY. ARE EXTREMELY SENSIBLE, THE HON PETER POON SAID IN THE LEGISLATIVE COUNCIL TODAY (WEDNESDAY).

SPEAKING DURING THE BUDGET DEBATE, MR POON NOTED THAT AS HONG KONG HAD TO DEPEND EXTIRELY ON EXTERNAL TRADE, AN ENVIRONMENT ATTRACTIVE TO ENTREPRENEURS AND CONDUCIVE TO ECONOMIC GROWTH MUST BE MAINTAINED.

+THIS INCLUDES EFFICIENT GOVERNMENT AND SERVICES, STABLE CURRENCY, LOW TAXATION AND FREEDOM FROM UNNECESSARY GOVERNMENT INTERVENTION, + HE SAID.

ECHOING THE FINANCIAL SECRETARY'S VIEW THAT WE MUST NOT BE COMPLACENT AND THAT ONE YEAR'S RESULT COULD BE ILLUSIVE, HE SAID THE GROWTH OF PUBLIC EXPENDITURE SHOULD NOT EXCEED THE GROWTH IN THE GDP.

MR POON DESCRIBED THE FIVE-YEAR MEDIUM RANGE FINANCIAL FORECAST AS TIMELY, SAYING LOCAL AND OVERSEAS BUSINESSMEN NEEDED TO HAVE SOME INDICATIONS OF FUTURE ECONOMIC TRENDS FOR THEIR OWN CORPORATE PLANNING. A mé

CONCERNING THE ASSUMPTION THERE WOULD BE A 4.5 PER CENT GROWTH IN THE GDP, WHICH MIGHT BE CONSIDERED BY SOME TO BE CONSERVATIVE, HE SAID HONG KONG ALREADY HAD QUITE A DEVELOPED ECONOMY AND CONTINUING HIGH GROWTH RATES ON THE PREVIOUS SCALE SHOULD NOT ALWAYS BE EXPECTED.

HE ALSO SAID HONG KONG HAD TO BE FRUGAL AND BUILD UP COMFORTABLE RESERVES IN VIEW OF THE CURRENT UNPREDICTABLE ECONOMIC CLIMATE.

MR POON SAID REVENUE SHOULD BE HELPED BY THE EXPECTED IMPROVEMENT IN EXPORT PERFORMANCE.

HE BELIEVED THAT THE INLAND REVENUE (AMENDMENT) ORDINANCE RECENTLY ENACTED SHOULD PREVENT ANY LARGE-SCALE LOSS OF REVENUE THROUGH SUCH MEANS AS TAX-BASED LEASING AND BLATANT TAX-AVOIDANCE SCHEMES.

+THE PROPOSED REPEAL OF THE SECTIONS OF THE INLAND REVENUE (AMENDMENT) ORDINANCE 1984 RELATING TO OFFSHORE INTEREST EARNED BY PERSONS OR COMPANIES CARRYING ON BUSINESS IN HONG KONG WILL ALLEVIATE THE CONCERNS OF MANY THAT SUCH LEGISLATION HAS CREATED UNCERTAINTY OVER HONG KONG'S LONG-ESTABLISHED TERRITORIAL SOURCE' TAX CONCEPT,+ MR POON SAID.

J

ON PUBLIC SECTOR EXPENDITUR ME BOON ADVOCATED THAT VALUE- FOR-MONEY STUDIES BE INTENSIFIED.

/HE ALSO