XN000022-1989-04-26 — Page 25

WEDNESDAY, APRIL 26, 1989

23

BUT SHE WAS NOT IN FAVOUR OF GROUPING THE MONEY WITH THE EXCHANGE FUND BECAUSE, SHE SAID, THERE WAS A LACK OF PUBLIC ACCOUNTABILITY OR INFORMATION IN RELATION TO THE EXCHANGE FUND.

ON BUDGETARY POLICY AS A WHOLE, SHE SAID THERE WAS A NEED ΤΟ REVIEW THE CONCEPT OF BUDGETING, TO ELIMINATE THE YEARLY MINOR ADJUSTMENTS TO TAX RATES AND TO CONCENTRATE ON FORMULATING LONGER-TERM BUDGET PLANS.

+

"THE GOVERNMENT SHOULD LOOK AT PERIODS OF FROM FIVE TO 10 YEARS TO PROJECT BOTH ITS CAPITAL AND RECURRENT EXPENDITURES, SHE SAID,

CAREFUL THOUGHT TO INDIRECT TAX: JIMMY MCGREGOR

* * * * *

THE GOVERNMENT SHOULD THINK MOST CAREFULLY BEFORE INTRODUCING A FURTHER AND MUCH MORE EXTENSIVE INDIRECT TAX, ESPECIALLY IF IT HAD NOT BEEN PROVEN THAT AN ADDITIONAL TAX SOURCE WAS GOING TO BE NEEDED, THE HON JIMMY MCGREGOR SAID TODAY WEDNESDAY).

SPEAKING IN THE BUDGET DEBATE IN THE LEGISLATIVE COUNCIL, MR MCGREGOR SAID HONG KONG WAS A CAPITALISTIC SOCIETY WITH A VERY DIFFERENT WEALTH DISTRIBUTION PATTERN THAN IN OTHER COUNTRIES WITH DIFFERENT ECONOMIC PHILOSOPHIES.

"THE MAJORITY OF HONG KONG PEOPLE DO NOT PAY INCOME BECAUSE THEY DO NOT EARN ENOUGH IN WAGES TO QUALIFY THEM AS PAYERS, HE SAID.

ADDED.

TAX

TAX

THEY ALREADY PAID INDIRECT TAXES HOWEVER IN MANY WAYS, HE

MR MCGREGOR PREDICTED THAT A SALES TAX PROPOSAL WOULD BE RESISTED BY MANY IN HONG KONG.

REFERRING TO REMARKS THAT A HIGH PROPORTION OF CORPORATE PROFITS TAX WAS PAID BY A SMALL NUMBER OF LARGE COMPANIES, MR MCGREGOR SAID THIS SITUATION WAS FELT то BE INEQUITABLE AND POTENTIALLY UNSTABLE.

HE POINTED OUT THAT THE SAME SMALL GROUP OF COMPANIES WERE MAKING PROFITS COMMENSURATE WITH THEIR TAX PAYMENTS.

"THEY ARE ALSO MOSTLY PUBLICLY QUOTED COMPANIES WITH A VERY LARGE NUMBER OF LOCAL SHAREHOLDERS WHO ALL BENEFIT FROM THEIR SUCCESS, HE SAID.

TURNING то INFLATION, MR MCGREGOR SAID PART OF THE INFLATIONARY PRESSURE AROSE FROM THE HONG KONG/US DOLLAR LINK AND RELATIVE WEAKNESS OF THE US DOLLAR AGAINST THE OTHER MAJOR CURRENCIES.

THE

"OUR EXPORTS