XN000022-1989-04-26 — Page 21

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WEDNESDAY, APRIL 26, 1989

ON THE FISCAL SIDE, MR ARCULLI SAID THAT TAX RATES OR THE LEVEL OF PUBLIC EXPENDITURE GAVE US LITTLE SCOPE AS A REDUCTION IN TAX RATE WAS INFLATIONARY AS WAS INCREASING PUBLIC EXPENDITURE.

HE HOPED THAT HONG KONG DID NOT NEED A RECESSION то SEE INFLATION BROUGHT DOWN TO AN ACCEPTABLE LEVEL.

TURNING TO THE FINANCES, MR ARCULLI SAID ALLOCATION IN 1989/90, ENVIRONMENTAL PROTECTION SHARE, WAS MOST WELCOMED.

FINANCIAL SECRETARY'S

STRATEGY FOR PUBLIC THE CHANGE IN THE PATTERN OF RESOURCE WITH SOCIAL SERVICES, EDUCATION AND PROGRAMMES ACCOUNTING FOR AN INCREASING

WARNING THAT THE SUCCESS OF SUCH PROGRAMMES WOULD BE IMPAIRED TO BE IF THEY WERE NOT CONTINUOUSLY NURTURED, HE EMPHASISED THE NEED VIGILANT IN MONITORING PUBLIC EXPENDITURE, PARTICULARLY MAJOR INFRASTRUCTURAL WORKS IN THE PIPELINE, IN AN INFLATIONARY ENVIRONMENT.

ON THE PROPOSED SALES TAX, MR ARCULLI THOUGHT THE TWO EQUALLY COMPELLING REASONS AGAINST ITS INTRODUCTION WERE THAT IT REPRESENTED A DANGEROUS FOUNDAMENTAL SHIFT IN HONG KONG'S TAXATION THAT IT AFFECTED THE LESS FORTUNATE MEMBERS OF THE COMMUNITY MOST.

POLICIES AND

HE WELCOMED THE INTRODUCTION OF A PROGRAMME FOR THE ISSUE OF SHORT TERM EXCHANGE FUND BILLS SAYING THAT HE AWAITED DETAILS WITH GREAT INTEREST.

"I DOUBT WHETHER IT WILL HELP ALLEVIATE INFLATION BUT IF WE

US AT ARE WEDDED TO THE LINKED EXCHANGE RATE SYSTEM LET

LEAST HAVE PAPER MARKET AND THE BENEFIT OF DEVELOPING THE HONG KONG DOLLAR

OF THIS RESPECT STREAMLINING THE PROTECTION

INVESTORS ORDINANCE INDICATED BY THE FINANCIAL SECRETARY WOULD BE A MOST HE SAID.

WELCOMED

IN AS STEP,

It

STRESSING THE IMPORTANCE OF HONG KONG'S CONTINUED DEVELOPMENT AS A LEADING FINANCIAL CENTRE, MR ARCULLI SAID THAT THE INTEREST TAX AND STAMP DUTY ON THE SCRIPT WOULD BE OF ASSISTANCE,

LENDING

AND

ABOLITION OF

OF BORROWING

SHARE

HE WAS PARTICULARLY DELIGHTED THAT THE FINANCIAL SECRETARY

THAT IMPLIED

THE ABOLITION OF INTEREST TAX INHIBITION IN THE DEVELOPMENT OF THE

HAD

AN

AS

IF

WOULD REMOVE FINANCIAL MARKETS AS WELL INTERNATIONALLY ACCEPTED PRACTICES IN SHARE SETTLEMENT PROCEDURES, BECAUSE IT WOULD BE EXTREMELY DETRIMENTAL TO HONG KONG SUCH MEASURES WERE RE-INTRODUCED IN THE FUTURE.

FOLLOWING

HIS THINKING

HE URGED THE FINANCIAL SECRETARY TO CRYSTALLISE ON THE ISSUES OF EXEMPTING UNIT TRUSTS AND MUTUAL FUNDS FROM TAX ON A

AS WELL

WHETHER GAINS WIDE RANGE OF PROFITS THEY CURRENTLY MADE AS MADE BY VENTURE CAPITALISTS ON SALE OF HIS INVESTMENTS WAS PROFITS TAX.

LIABLE то

/IN THE