A Welcome Budget

The Financial Secretary's strong Budget re-statement of the Government's traditional role of "maximum support and minimum intervention" in the local economy is welcome after the extraordinary actions prompted by the East Asian financial crisis
in 1997 and 1998.

Chamber Director, Dr Eden Woon said the Financial Secretary's reiteration of this important foundation stone of Hong Kong public policy should go a long way to re-assuring the local and international business communities on the future role of Government in the local economy.

He also welcomed the proposed restructuring of government bureaux charged with enhancing investment in industry and services, as well as the Government's plans to attract more foreign investment to the SAR.

Dr Woon said the Financial Secretary's fifth Budget was notable for the balance and restraint shown by the Government in the face of uncertainties about future government revenue streams and the narrowness of the traditional tax base.

"The Financial Secretary has made the wise choice in deciding not to act precipitously by either raising existing taxes or seeking to introduce new taxes or extend the tax base without adequate public discussion," he said.

"The Chamber looks forward to taking part in the forthcoming discussions of the SAR's future revenue needs and whether its existing attractive, stable and low, source-based tax system needs to be changed."

Dr Woon said that in its pre-Budget submission to Government, the Chamber had indicated that if further tax concessions to business could not be afforded in 2000-2001 then the status quo should be maintained as far as existing taxes and fees and charges are concerned.

"This has been achieved in the Budget outlined by the Financial Secretary today," he said.

Dr Woon said the Financial Secretary's 2000-2001 Budget exercise was made somewhat easier by the more rapid recovery in the local economy, with real growth at 2.9 per cent in 1999 and expected growth of some 5 per cent in the current calendar year.

"If we have concern about anything in the Budget it is the application of investment earnings on the Government's share portfolio being applied to the reduction of the overall deficit he said. "It must be recognised that this is only a short term fix to what might prove to be a longer term problem."

For further information, contact: Ian K Perkin, Chief Economist  2823 1242