Budget Submission

Every year, we put in a Chamber budget submission, with significant input from the Taxation Committee and several other committees. In January, we informed the government that the top priority for the government is to control expenditures, since we are very alarmed at the large budget deficit. We said that if in the Budget speech in early March we see a concerted, comprehensive, long-term effort by the government to deal with expenditures, then the business community would be "open minded" towards tax increases. Therefore, while we understand the need to share the burden in difficult fiscal times for Hong Kong, we will only do so if the expenditure side is taken care of first by government.

The Chamber submitted to the Chief Executive a report of a pay level survey we commissioned Watson Wyatt to conduct (see page 25). The survey found that if we look only at cash, the mid-point civil servant is paid 17 per cent more than the 75th percentile private sector employee, and if we look at remunerations, that number rises to 40 per cent. These figures are all the more astonishing since housing and education benefits are not included. Based on these results, the Chamber called for an immediate reduction of 6 per cent in civil service pay, a full-scale pay survey by the government, and a long-term effort to fundamentally restructure the civil service.

Since the Chief Executive has indicated that the Central and SAR governments plan to conclude a CEPA agreement by the end of June, the Chamber sent in a thirty-page submission in February detailing what the business community would like to see this agreement include and how the government can proceed in the next four months. Thanks to input from members, we continue to favor zero tariff for Made in Hong Kong goods and early liberalization for service sectors. We also raised the possibility of using Guangdong as an "experimental point" in early liberalization, which is allowed under WTO rules.