TNAG-0761-FCO40-965-Budget-of-Hong-Kong--1978-1979-1978 — Page 84

SECRET

GOVERNMENT HOUSE

HONG KONG

香港總督府

Das Jahu.

BUDGET 1978/79

31 January 1978

Lkk lod &

DESK DA INDEX

PA

lal ولد

1973

R.

Acvo : T. >

1. As promised in my telegram 119, I enclose a preview of the 1978/79 Budget in the form of a copy of a note to me from Philip.

2.

Figures have been late in coming in this year and the attached note cannot yet include an estimate of the GDP for this year. When available this will be telegraphed, but in October I forecast it to be

'as high as 8%" (paragraph 13 of LegCo speech).

??

3.

We are seriously reconsidering the tradition of bringing in the Budget more than a month before the end of the financial year. As the accounts to be dealt with have increased in size and complexity, as well as the factors affecting the economy, and the statistical base has been steadily widened, it has become much more difficult to complete the exercise in time. A further month now deducted to give the FCO a preview makes the position still more difficult.

4.

In the circumstances the note attached gives you what is available. But I will telegraph a breakdown of social expenditure and an indication of its percentage growth as soon as this is available.

The main feature of the budget is the further massive increase of 25% in total expenditure which carries on recent practice (1972/73: $3,800 M; 1978/79: $10,250 M).

5.

6.

With regard to revenue proposals, I imagine that the extra half percent on corporation profits tax will be at least not a minus point in Whitehall. The major revenue proposal (revision of taxation of interest) goes to ExCo today, and you can see the details of the proposals in XCC(78)7. How it will fare in ExCo

SECRET

/ I do