XN000022-1996-03-06 — Page 47

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Not time for reducing healthy reserves

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This is not the time, with all its inherent uncertainties, to reduce the cushion of healthy reserves that Hong Kong at present enjoyed, the Financial Secretary. Mr Donald Tsang, stated unequivocally.

"Our reserves underpin the soundness of our financial system and must be maintained," he said.

Mr Tsang said following a recent visit by the International Monetary Fund, its report wholeheartedly endorsed the Government's commitment to maintaining Hong Kong's long-established fiscal policies.

"Indeed they emphasised. and I use their words, the need to preserve the reserves for 'torrential downpours not the mild showers' we are currently experiencing." he added.

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No change to tax enforcement

The Financial Secretary. Mr Donald Tsang, proposes no changes to tax enforcement.

"On tax enforcement, we have recently introduced legislation to counter the use of service companies to avoid or significantly reduce tax liability." Mr Tsang said today (Wednesday).

"We have also legislated to specify the minimum records which all businesses must keep for taxation purposes."

The Financial Secretary said he was confident that the new legislation was achieving its aims and he did not propose any further measures for the time being.

Over the past three years, the Inland Revenue Department's investigation and field audit staff had tackled some 3.700 cases and collected about $3 billion in back taxes and penalties.

"In the coming year, we will step up our efforts in this area by establishing an additional field audit team, increasing the total to nine." he added.

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