Surplus 'safe' from lower premiums
A $10 BILLION shortfall in land premiums this year in the wake of the property slowdown is unlikely to have a significant impact on the 1994-95 surplus estimate, accountants believe.
The Government on Friday announced revised figures showing proceeds from land premiums will be about $29.9 billion, down from an initial estimate of $39.5 billion.
But accountants expect the shortfall will be absorbed by better-than-forecast revenues built into budget estimates elsewhere, including salaries and profits tax.
Sir Hamish Macleod's original estimates are widely seen as ultra-conservative, with any downturn in traditional revenue earners, such as land sales, unlikely to upset the Government's $7.7 billion surplus estimate for 1994-95.
Marshall Byres, tax chairman with Ernst & Young, said: 'We shall probably be left this year praising Sir Hamish for having set probably as accurate a budget in 1994 as we have seen for many years.' Although there is consensus among Budget commentators that Sir Hamish's Budget will deliver a near pin-point accurate surplus, Price Waterhouse accountant Bill McKenzie said he was expecting around a $2 billion undershoot.
General revenue figures would not be known until Sir Hamish tabled the Budget on Wednesday, but Mr McKenzie said if the out-turn was in line with estimates the Government could be looking at a surplus of closer to $5 billion.
The Financial Secretary's final budget is also expected to provoke renewed debate about the scope of Hong Kong's tax base and whether it is broad enough to withstand a significant downturn in the economy.
'A broader tax base would mean the territory would be more capable of withstanding any big shocks to the economy but it must be remembered that a hell of a lot of operating revenue does not come just from tax,' Mr McKenzie said.
This debate surfaces virtually every year but Sir Hamish has shown no inclination to widen the tax net, partly to protect Hong Kong's reputation as a low-tax centre in the region.
Economists say he does not see any significant slowdown in the economic growth rate, despite a growing number of signals that the territory's robust growth is starting to slow down.
Ian Perkin, chief economist with the Hong Kong General Chamber of Commerce, said: 'Expenditure estimates suggest that Sir Hamish has again taken the view that the economy will be healthy and grow at around about 5.9 per cent.' Mr Perkin said Sir Hamish was likely to speak 'appreciatively' of the territory's underlying economic performance in 1994-95, despite the declines in the property and share markets, higher interest rates and slower trade growth.