XN000022-1990-05-09 — Page 18

16

WEDNESDAY, MAY 9, 1990

"BUT THE LONG TERM,

STRATEGIC NATURE OF THIS PROCESS IS UNDERLINED BY THE FACT THAT WE DO NOT TRY TO MEET THIS GUIDELINE YEAR BY YEAR, BUT RATHER OVER A PERIOD - A POINT EMPHASISED A NUMBER OF TIMES IN THE STRATEGY SECTION OF MY BUDGET SPEECH," HE SAID.

HE WELCOMED THE CALLS BY MANY MEMBERS FOR CONTROLLING PUBLIC EXPENDITURE, AND IN PARTICULAR RECURRENT EXPENDITURE, MORE TIGHTLY.

"IT WAS A KEY THEME OF MY BUDGET SPEECH AND INDEED I SOUNDED INITIAL WARNINGS ON THIS PROBLEM IN THE 1989 BUDGET SPEECH.

BUT WHAT I ALSO NEED FROM MEMBERS IS THEIR SUPPORT, THEIR REAL SUPPORT, IN THE IMPLEMENTATION OF THIS TIGHTER CONTROL," HE ADDED.

THE FINANCIAL SECRETARY NOTED THAT TO GIVE THIS SUPPORT WOULD NOT ALWAYS BE EASY OR POLITICALLY POPULAR.

"RESTRAINT CANNOT EASILY BE COMBINED WITH PRESSURE FOR MORE EXPENDITURE AND MORE NEW SERVICES,' HE SAID.

"

SIR PIERS REMINDED MEMBERS THAT IN THE 1989 BUDGET DEBATE, OVER HALF THE SPEAKERS CALLED FOR ADDITIONAL EXPENDITURE, CONCESSIONS, OR BOTH. "I TAKE CONSIDERABLE COMFORT FROM THE FACT THIS YEAR THE PRESSURE FOR FUNDING NEW ITEMS WAS NOTICEABLY LESS.

WELL

TAX

THAT

"YET STILL SOME MEMBERS PRESSED FOR INCREASED EXPENDITURE ON PRE-PRIMARY EDUCATION, TERTIARY EDUCATION, MANPOWER TRAINING, SOCIAL WELFARE, DENTAL SERVICES, HOSPITAL AND HEALTH CARE, RESEARCH AND DEVELOPMENT, SCIENCE AND TECHNOLOGY, IMPROVING HONG KONG'S IMAGE, AND

ON.

ALL THIS AND A RANGE OF SUGGESTED TAX CONCESSIONS,' REMARKED.

80

HE

THE FINANCIAL SECRETARY SAID FOR 1990-91, THE GOVERNMENT WAS FACED WITH A DEFICIT AND TWO BASIC DECISIONS HAD TO BE MADE.

THE

FIRST, DECISION ACCORDING TO THE FINANCIAL SECRETARY WAS WHETHER TO BALANCE THE BUDGET AND HE DECIDED THIS WAS ESSENTIAL, BEARING IN MIND THE INFRASTRUCTURAL PROGRAMME AHEAD, AND OTHER PRIORITY AREAS SUCH AS TERTIARY EDUCATION AND THE ENVIRONMENT, WHERE INCREASED EXPENDITURE WAS HIGHLY DESIRABLE.

IN

ור

I

A

I ALSO TOOK INTO ACCOUNT THE RELATIVELY LOW GDP GROWTH LIKELY THE

NEXT FEW YEARS, WITH THE PROBABILITY OF LOWER TAX YIELDS. BELIEVE, AS I EXPLAINED, THAT THE GOVERNMENT MUST SEEK TO MAINTAIN STRONG FINANCIAL POSITION, HAVING REGARD TO THE TIGHTER BUDGETARY SITUATION THAT MAY BE ENCOUNTERED IN THE SHORT AND MEDIUM TERM."

THE SECOND QUESTION, SAID SIR PIERS FLOWED NATURALLY FROM THE ANSWER TO THE FIRST, NAMELY HOW BEST TO RAISE THE ADDITIONAL REVENUE.

HE SAID THE REASON FOR RELYING ON INDIRECT TAXES WAS NOT ONLY HIS CONCERN OVER THE TERRITORY'S NARROW AND VULNERABLE TAX BASE.

"T WAS MY JUDGEMENT THAT TO INCREASE DIRECT TAXES ON THIS OCCASION WOULD HAVE RISKED SENDING ENTIRELY THE WRONG MESSAGE, PARTICULARLY TO OVERSEAS INVESTORS.

/"THE GENERAL