delay. It is much easier to slide into deficit than to recover
from that unhappy state, and accordingly, a cautious approach is
needed even when we appear to be riding on the crest.
5.
Like my predecessors, I am firmly convinced that we
should endeavour to maintain a low and predictable tax regime.
Hong Kong's reputation as a place in which business can be
conducted profitably depends to a large extent upon our keeping
tax rates low. I can, nevertheless, see merit in at least
considering different mixes of tax sources from time to time. I
shall say more about this later.
6.
I believe that as our
reasonable and natural that
improvements in public services.
wealth grows, it is entirely
our community should expect Nevertheless, if the objective
of maintaining low taxation is to be achieved, the growth in
expenditure on those services must stay within, rather than run
ahead of, the expansion of
economy. Even in the improved
situation that we are now experiencing, resources remain limited
and choices must be made. We must not allow the public sector to become a millstone around the neck of the economy, something that has happened in many other places.
7.
I shall now outline the recent and expected performance of the economy (1). Having set the scene, I shall then go on to
explain the strategy that I see for the public finances over the next few years and give estimates of Government's
Government's finances in
the current year and for 1987-88.
THE ECONOMY 1986 EXPERIENCE AND 1987 PROSPECTS
8.
In 1986 we saw a general revival in economic activity.
Domestic exports have picked up substantially since last March
and achieved a growth rate of about 16% in real terms for the
(1) See '1986 Economic Background' and '1987 Economic Prospects' for further
details.
2
/year
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