TNAG-0453-FCO40-518-Budget-of-Hong-Kong-1974-1975-1975 — Page 144

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the growth rate of the economy in the forecast period is not borne out and expenditure cannot be cut back or even further revenue raised quickly enough. I have assumed, remember, as my honourable Friend Mr. Q.W. Lee rightly reminded us, that the economy will revert to a 7% growth rate in real terms. I suppose we could do even better than that but, in this event and assuming physical and/or economic constraints do not concern us - less rephasing of expenditure will be

necessary.

28.

And, further to the use of our available fiscal reserves: let us remember, with my honourable Friend Mrs. Symons,

that they now only represent 53% of our much larger expenditure budget; let us agree with my honourable Friend

Mr. Q.W. Lee that we live in a world of unforeseen contingencies; and let us not forget that in 1974-75 our reserves will earn us $360 million or the equivalent of the yield from more than four extra percentage points on the standard rate of profits tax. Thus our reserves are an end in themselves to some extent and I would ask my honourable Friend Mr. Wilfred Wong not to overlook the earning power of our reserves in his anxiety to see them spent (and he would admit, I am sure, that

I would also remind him that they can only be spent once).

one of the considerations I bore in mind in my tax relief measures in 1972 and 1973, amounting in all to $163 million per annum, concerned the way in which the present generation of taxpayers has contributed in recent years to the financial resources available for spending in the future.

29.

But to return to budgetary strategy: on the revenue

side,

I have been applauded (and criticised) for being too optimistic and criticised for being too pessimistic (though some honourable Members, I suspect, thought I had hit the right note). My honourable Friend Mr. Szeto Wai, for instance, considers I have been unduly cautious in my estimate of revenue

It is extremely from earnings and profits tax in 1974-75.

difficult,

for even me to be categorical until the returns for this year are received. But I did attempt to make it clear in the budget speech why yields from 1974-75 assessments are not expected to be such a high proportion of the gross

/domestic.....