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THURSDAY, MARCH 19, 1987
SIXTHLY, ALTHOUGH HONG KONG WAS NOT A POLICE STATE, THERE SHOULD BE ADEQUATE PREPARATORY MEASURES TO COMBAT TERRORISTS ACTIVITIES AND VIOLENCE SO AS TO ENSURE LAW AND ORDER DURING THE TRANSITION PERIOD.
LASTLY, MR CHUNG SUGGESTED THE GOVERNMENT TO PLAN APPROPRIATE ADJUSTMENT MEASURES TO INCREASE THE ALLOCATION OF FUNDS TO THE POLICE AND CORRESPONDINGLY TO REDUCE MILITARY EXPENSES IN THE RUN-UP TO 1997.
COMMENTING ON THE BUDGET AS A WHOLE, MR CHUNG SAID IT WAS RATHER BALANCED+ AND +IT MET ACTUAL NEEDS+.
HE SAID HE SUPPORTED THE PRACTICAL PRINCIPLE UNDERLYING THIS +SURPLUS BUDGET+ AND WAS PLEASED TO SEE THAT HONG KONG WOULD DEVELOP FURTHER FINANCIALLY AND POLITICALLY AS IT ENTERED THE TRANSITION PERIOD.
HE ADDED THAT HE HOPED THE POLICY OF LOW TAXATION WOULD BE MAINTAINED AND THE GOVERNMENT WOULD MAKE LONG-TERM PLANNING TO STABILISE ECONOMIC RESOURCES.
MR CHUNG SUPPORTED THE FINANCIAL SECRETARY'S PROPOSAL TO WIDEN THE SCOPE OF INDIRECT TAXES AND PROPOSED A COMMITTEE TO STUDY THE ISSUE.
NOTING THAT THIS WAS A NEW FISCAL PLAN, HE SAID, HOWEVER DIRECT TAX ON ACTUAL INCOME WAS NOT ONLY FAIR BUT MORE IN KEEPING WITH THE PRINCIPLE OF OVERALL ECONOMIC BALANCE.
+ INDIRECT TAXES ARE NORMALLY DEPENDENT ON THE EXTENT OF CONSUMPTION. UNLESS IT IS CERTAIN THAT INCREASING CONSUMPTION WILL STIMULATE PRODUCTION, COMMODITY PRICES WILL INEVITABLY BE BOOSTED IF A WIDENED SCOPE OF INDIRECT TAXES IS PUT IN USE FOR A LONG TERM.
+UNDER DEFICIT TRADING CONDITIONS, IMPORTED INFLATION WILL DEFINITELY BE ACCELERATED.
+ IN TURN, THE GENERAL PURCHASING POWER OF THE CONSUMER MARKET WILL RELATIVELY BE WEAKENED AND SALES WILL BE SLOWED DOWN OR REDUCED, RESULTING IN A DIRECT IMPACT ON PRODUCTION OUTLET AND TAX REVENUE, HE SAID.
AS A WHOLE, MR CHUNG SAID HE WAS WORRIED THAT THE LOSS INCURRED BY THE WIDENING OF THE SCOPE OF INDIRECT TAXES WOULD OUTWEIGH THE EXPECTED GAIN.
FINALLY, HE SAID THAT THE FOLLOWING THREE MEASURES MUST BE CARRIED OUT IF HONG KONG WAS TO TAG THE ABUNDANT FINANCIAL RESOURCES:
/FIRSTLY,
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