TNAG-1641-FCO40-2288-Budget-of-Hong-Kong-1987 — Page 173

11.2.87

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42.

For the future, there is room for some further

improvement in facilities and services given the higher growth limit implied by the revised medium term projection

Recurrent

of economic growth. Against this background, I am

proposing that total expenditure growth be held to an average of around 5% over the forecast period. expenditure is already growing at an annual rate of over

5% and I would be reluctant to see it grow much faster

having regard to the implicit long-term commitment.

Whilst, therefore, I have allowed for some increase in

provision for new or improved services, my main emphasis

is on a resuscitation of capital spending and an increase

in the pace at which we are tackling the list of

outstanding projects.

Capital expenditure has fallen by

about 20% over the last three years.

43.

In

So much for expenditure. On the revenue side, I

would like to begin by saying a few words about the

relationship between direct and indirect taxes.

1982-83 we saw direct taxes contributing 69% of the total

tax yield. This fell to 60% in 1983-84, but it has now

started to edge upwards again (12). There is no immutable

or clearly correct ratio between the yields from direct

and indirect taxes; but for the longer term I do not

(12)

See Appendix A (i). SECRET