TNAG-1203-FCO40-1505-Policy-on-visas-and-entry-certificates-in-Hong-Kong-1982 — Page 226

VOLUME 8

APPENDIX

RESTRICTED

INFLATORS FOR ESTIMATES

Recurrent Estimates can be broken down into the following categories:-

Expenditure

i)

Salaries

ii)

Wages

iii)

Other charges

iv)

Public debt

Revenue

i)

Fees and charges

ii)

All other revenue

(ANNEX 17)

The inflator which should be taken ex ante at an annual rate equivalent to that experienced in the most recent six month period for which retail price index (rpi) data are available is not aplied across the board since there is no automatic inflation on some of the items which go to make up the Estimates. It is in fact applied or not applied as follows:-

EXPENDITURE

(a)

Salaries and Wages. Not applied. Since we do not guarantee to preserve the real incomes of public sector employees we need to avoid a procedure which incorporates an automatic allowance for inflation.

(b) Other charges. The costs of most items covered in this category, eg electricity, office expenses, travelling costs etc etc will rise as a result of inflation. Therefore "other charges" should be indexed in terms of the local rpi.

(c)

Public debt.

Loan repayments are fixed in money terms and are not therefore eligible for inflation allowance treatment.

REVENUE

(a)

Fees and charges. These are normally fixed statutorily and bear no relation to inflation. Accordingly the formula is not applied to them. However their real value must be preserved or even increased and taking one year with another they should be adjusted upwards through the necessary adjustments to subsidiary legislation or administrative instructions.

(b)

All other charges. All other revenue and in particular ad valorem customs duties, are subject to inflationary pressures and should therefore be indexed.

October 1978

120

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