XN000022-1991-03-06 — Page 28

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WEDNESDAY, MARCH 6, 1991

"NOTWITHSTANDING THE EFFECTS OF THE REVENUE MEASURES WHICH I SHALL BE PROPOSING IN THIS BUDGET, THE MEDIUM RANGE FORECAST INDICATES THAT THERE WILL BE CASH DEFICITS FROM 1992-93 ONWARDS, SIR PIERS CONTINUED.

HOWEVER, THE FIGURES IN THE FORECAST TOOK NO ACCOUNT OF POSSIBLE FUTURE REVENUE MEASURES, NOR WAS PROVISION MADE FOR ANY BORROWING.

"EVEN SO, OVER THE FORECAST PERIOD WE WILL ENJOY SUBSTANTIAL SURPLUSES ON RECURRENT ACCOUNT WHICH WILL ENABLE US TO COVER SOME THIRDS OF OUR CAPITAL EXPENDITURE," HE ADDED.

THE FINANCIAL SECRETARY SAID HE HAD STRESSED ON MORE THAN OCCASION THE IMPORTANCE OF ENSURING THAT THE RELATIVE SIZE OF PUBLIC SECTOR WAS NOT ALLOWED TO INCREASE TO THE POINT WHERE WEALTH-PRODUCING CAPACITY OF THE PRIVATE SECTOR WAS IMPAIRED.

TWO

ONE

THE

THE

"THERE IS NO HARD AND FAST RULE FOR DETERMINING THE OPTIMUM SIZE OF THE PUBLIC SECTOR. PUBLIC EXPENDITURE FOR THE FORECAST PERIOD WILL REPRESENT AN AVERAGE OF ABOUT 19.7 PER CENT OF GDP.

"THIS IS LARGELY THE RESULT OF THE ENHANCED LEVEL OF CAPITAL SPENDING, BUT IT IS STILL SOMEWHAT HIGHER THAN I WOULD WISH TO SEE FOR THE LONGER TERM, SIR PIERS NOTED.

AS

MAJOR PROJECTS WERE COMPLETED, HE SAID HE EXPECTED CAPITAL EXPENDITURE ΤΟ

RETURN TO LEVELS CLOSER TO THOSE THE GOVERNMENT HAD EXPERIENCED IN RECENT YEARS, WITH THE RELATIVE SIZE OF THE PUBLIC SECTOR FALLING ACCORDINGLY.

"IN SHORT, THE PRIVATE SECTOR WILL NOT BE CROWDED OUT BY THE PUBLIC SECTOR. THIS, I BELIEVE, IS THE BEST WAY TO ENSURE THAT HIGHER ECONOMIC GROWTH FROM WHICH ALL WILL BENEFIT,'

早上 HE SAID.

HK'S DEPENDENCE ON DIRECT TAXATION UNDER CONTINUED REVIEW: FS

THE

FINANCIAL SECRETARY, THE HON SIR PIERS JACOBS, SAID TODAY (WEDNESDAY} HE HAS CONTINUED TO KEEP UNDER REVIEW THE EXTENT OF THE TERRITORY'S DEPENDENCE ON DIRECT TAXATION.

"I BELIEVE THAT MANY IN OUR COMMUNITY ARE NOW AWARE THAT THE YIELD FROM OUR TAX SYSTEM, AS PRESENTLY STRUCTURED, IS VULNERABLE TO FLUCTUATIONS IN THE ECONOMY, SIR PIERS SAID, WHEN PRESENTING HIS BUDGET FOR 1991-92.

SPEAKING ON REVENUE POLICY AND TAXATION MATTERS, SIR PIERS SAID RECENT EVENTS IN THE WORLD UNDERLINED THE FACT THAT HONG KONG'S ECONOMIC PERFORMANCE WAS AT RISK FROM CIRCUMSTANCES ENTIRELY OUTSIDE ITS CONTROL.

/"IN CASE