35.
Most of the improvement in revenue comes from tax
sources that are recurrent in nature. I am able, therefore, to
plan on the basis that this represents a a genuine gain to our revenue base, which will be sustained into 1987-88 and beyond.
With the present improved outlook for
outlook for the public finances, we
have a range of options: further growth in facilities and
services; a reduction in the burden on taxpayers; the
accumulation of fiscal reserves; or a prudent mixture of all of
them. The last option is, in my view, the right way forward.
The proposals I shall detail later include a controlled increase
in public spending together with a modest lowering of the burden
on taxpayers.
36.
Last year, for the first time, we included in the
budget a Medium Range Forecast. Such a forecast should not be
regarded as detailing a plan of action, but merely as providing
a benchmark against which progress can be measured.
37.
The Medium Range Forecast is put together on the basis
of a number of important underlying assumptions (10). I shall
now comment upon some of these assumptions, and draw attention
to any changes that have taken place since the last Medium Range
Forecast was published.
our
38.
First, let me stress the importance of the economic
growth rate assumption in the Forecast and accordingly in
planning. The previous medium range assumption of an average
annual growth in GDP of 4 1/2% was arrived at when preparing the
1986-87 budget after taking into account past trends and
prospects at that time. The trend growth rate of the economy
(10) The assumptions are described in Appendix C.
11
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