XN000022-1997-03-12 — Page 25

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Mr Donald Tsang: Thank you. I am sure all of you must have heard me speaking at LegCo for over an hour-and-a-half just now, and earlier on your colleagues have conducted an indoor session on my Budget. I am sure you have a lot of questions for me today.

This year's Budget is special and when we started working with the Chinese side on this particular Budget this has generated a lot of curiosity from all quarters. And also in the process of discussing with the Chinese side on the Budget, a lot of quarters expressed views that maybe the budgetary process would not be as smooth as before. But as it turned out, the budgetary process was quite smooth and what is particularly heartening is that we are working with the Chinese side on something so politically sensitive and the outcome and the result, is acceptable and satisfactory to all parties. And so me and my team, we are very heartened by this.

Concerning expenditure for this year, we followed our traditional guidelines and we have pushed our expenditure level to the limit allowed by our resources and it is over the $200 billion mark. And of course members of the community have got varied views on expenditure and in the process of developing this Budget we have tried to accommodate wishes and views from all quarters and we have tried to strike a balance.

As for revenue, especially with regard to taxation, indeed we have followed conservative guidelines and the reason for doing so is that concerning the revenue from now up to 2001, there are several big projects that have to be covered and these big projects are all quite expensive. For instance the several railway projects would cost $50 billion as an initial estimate and that is why we have to be very cautious here.

And secondly, we have to be mindful of inflationary pressure and in the last quarter of last year inflationary pressure has gone back up again and we believe that inflationary pressure will continue to rise and this year we expect the inflation to reach 7%. Coupled with the fact that exports are rising again and our growth rate being 5.5%, that is why we have to be very cautious and prudent. And also, with regard to tax concessions and allowances we have to be very careful.

We believe that the sandwich-class is very important here when it comes to tax allowances, that is why we have given them more tax concessions. And also, for the business sector and for those who possess their own homes, I have also tried to give them more concessions with regard to rates by a reduction of 0.5 percentage point. And so many classes and members of the community will benefit from this Budget and for details you can refer to my Budget Speech.