TNAG-2470-FCO40-3594-Budget-of-Hong-Kong-1992 — Page 13

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.3.

!

2

(e)

The future SARG would have to cut expenditure

to cool down the economy and would not be able

to

maintain

welfare and

public

works

programmes.

TAX STRATEGIES

On taxation, Luo said:

(a)

The 1 per cent rise in profits tax would be

tolerable if the CPG had some guarantee that

further tax rises would not be required in the

future to cover the rising costs of the

welfare and infrastructural programmes;

and

Es hes

give

Some pretty

broad hints

Had they won't

(6)

If further tax rises were announced in the

1993 Budget, the JLG would be forced to put

this issue on its agenda.

4.

He predicted that the Financial Secretary would

respond to public criticisms:

(a) By rasing the salaries tax threshold; but

(b) By sticking to the increases in profits tax

and rates.

CONFIDENTIAL