TNAG-1641-FCO40-2288-Budget-of-Hong-Kong-1987 — Page 179

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11.2.87

56.

The size of the Civil Service remains the major

determinant of Government's spending, and the December on

December growth rate of 2% is within the planning target

and reflects both firm control and further implementation

of our successful programme of value for money studies.

57.

As to revenue, there was, last year, some cause

for pessimism over revenue prospects given the less than

satisfactory economic performance in 1985 and its expected

lagged effect on tax receipts. I am pleased to be able to

record, however, that the rapid recovery in 1986 exceeded

our expectations and, as I have said, this has generated

considerable improvements in those revenue areas most

closely linked to economic performance.

58.

The most significant gains have come from

profits tax, salaries tax and stamp duty which, together,

are estimated to yield a total of $2.8 billion more than

budgetted. Both profits and salaries tax yields have

grown ahead of even the preliminary estimate of GDP growth

for 1986, reflecting a major resurgence in the profits of

property and export oriented businesses, and substantial

salary increases. As to stamp duty, the turnover on the

stock market has been running well ahead of the level of

the previous few years.

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