TNAG-0622-FCO40-770-Budget-of-Hong-Kong-1977 — Page 107

7

I had regard to the second objective of budgetary policy, namely, that the fiscal system should be as equitable as possible as between different classes and groups of taxpayers and inexpensive to administer.

21.

(c) Steady progress

But the maintenance of a proper balance between the public sector and the economy as a whole and the construction of budgets which conform (or do not conform for acceptable reasons) with my guideline ratios do not, in themselves, ensure that we maintain a steady rate of progress. And a steady rate of progress should be catered for in the inter-play with which the decision-making process has to resolve and, of course, I mean a steady rate of progress in the absence of really adverse and/or prolonged shifts in the world trading environment.

22.

So we need to have some idea of the rate at which public expenditure can grow annually in real or constant price terms. Based on historical experience in the 70s, we take the view that this rate is about 10%. It may well have to be less in some years; and could be more in others (but, quite apart from the fact that there is a variety of constraints on public expenditure, there is a very real danger of money being wasted if we try to spend too much, too quickly).

га

дапре of continuing

It also

social

injustice I hov

Witle

23. But steady progression is not just a matter of fixing upon a growth rate which is practicable. depends on the extent to which we are able to insulate the management of the public finances from short term deviations from the trend growth lines of revenue and expenditure. I say this because such deviations should not, ideally, affect the implementation of the Government's policies and programmes or involve adjustment to tax rates

and charges.

A sudden change of pace which is not the same thing as stop/go is inevitable in a situation in which the world trading environment shifts adversely or when, perhaps through failure to exercise proper control over expenditure, a tendency to persistent deficits emerges.

CU

Spent