XN000022-1988-04-21 — Page 4

THURSDAY, APRIL 21, 1988

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BUDGET GIVES POPULATION THEIR SHARE OF HK'S SUCCESS

THE BUDGET HAS COMBINED CAUTION WITH AN EFFORT TO ALLOW THE POPULATION AT LARGE TO ENJOY THEIR SHARE OF HONG KONG'S ECONOMIC SUCCESS AND THE VERY MUCH LARGER THAN ORIGINALLY PREDICTED FISCAL SURPLUS, DR THE HON HELMUT SOHMEN SAID TODAY (THURSDAY).

DR SOHMEN WAS SPEAKING DURING THE BUDGET DEBATE IN THE LEGISLATIVE COUNCIL.

HE SAID REDUCTIONS IN DIRECT TAXES, INCREASE IN TAX ALLOWANCES, CUT IN STAMP DUTY TO ENCOURAGE HOME OWNERSHIP, AND INCREASES SOCIAL SERVICES SPENDING ALL POINTED TO A BUDGET THAT ATTEMPTED ALLOW THE POPULATION TO ENJOY THEIR SHARE OF HONG KONG'S SUCCESS.

IN ΤΟ

TURNING TO THE POSSIBILITY OF WIDENING THE TAX BASE, DR SOHMEN SAID HE WAS PLEASED THAT THE FINANCIAL SECRETARY HAD SHOWN BOTH THE COURAGE TO PURSUE HIS VISION, DESPITE THE NEGATIVE COMMENTS ON THIS SUBJECT, AND THE PATIENCE NOT TO RUSH INTO WHAT WAS ALWAYS PRONE ΤΟ BE A POLITICAL MINEFIELD.

DR SOIMEN SAID THAT BECAUSE OUR CURRENT TAX BASE WAS SO NARROW, WE WERE MORE VULNERABLE TO POSSIBLE ADVERSE FACTORS.

HE THEREFORE HOPED THAT BOTH LEGISLATIVE COUNCIL MEMBERS AND TIF PUBLIC AT LARGE WOULD SUPPORT THE FINANCIAL SECRETARY'S CONTINUED FAVESTIGATION INTO A SCHEME FOR A BROADENED TAX BASE TIIAT WOULD ACHIEVE THE STATED OBJECTIVES.

ON THE TIGHT LABOUR MARKET SITUATION, DR SOHMEN SAID THIS WAS A HEADACHE THROUGHOUT THE BUSINESS COMMUNITY.

IT HAS POTENTIALLY VERY WORRYING LONGER-TERM CONSEQUENCES FOR HONG KONG'S REPUTATION AS A SUITABLE SERVICE CENTRE AND BASE LOCATION IN THE REGION, FOR OUR COMPETITIVE TRADING POSITION, AND EVEN FOR THE QUALITY OF GOVERNMENT SERVICES, HE SAID.

DR SOHMEN NOTED THAT THE GOVERNMENT'S RESPONSE SO FAR TO THIE PROBLEM HAD BEEN ONE OF "HEAD IN SAND".

INCREASES, RELOCATION

THE GOVERNMENT ARGUED THAT PRODUCTIVITY OF MANUFACTURING ESTABLISHMENTS ACROSS THE BORDER, MORK TRAINING, ADDITIONAL CAPITAL INVESTMENT, LARGER FEMALE PARTICIPATION IN THE WORKFORCE, THE ATTRACTIONS OF HIGHER WAGES, AND THE EXPECTED IN ECONOMIC GROWTH WOULD EASILY TAKE CARE OF MATTERS, HE SAID.

BUT THESE REMEDIES TAKE TIME, EVEN ACCEPTING THEY ARE APPLICABLE. AND THEY ALSO COST MONEY AND THUS INCREASE THE PRODUCTION," HE SAID.

SLOWDOWN

READILY

OF

COSTS

/DR SOHMEN