Taxation issue gets stuck on the rocks

PUBLISHED : Thursday, 13 March, 1997, 12:00am
UPDATED : Thursday, 13 March, 1997, 12:00am

The previous budget nautical analogies like 'setting a steady course' were perpetuated this year by the Financial Secretary with his portrayal of Coleridge's Ancient Mariner: 'Money money everywhere and not a buck to spare' was the message of this speech.

The albatross of taxation, albeit not a particularly large or oppressive albatross, remained untouched.

The opportunity which he missed, and missed deliberately, to not only signal future tax cuts, but actually put in place cuts for the coming year, is sorely lamented.

A mere one per cent cut across profits and salaries taxes would have cost a paltry $5 billion - which, out of a projected surplus of $32 billion, is barely significant.

The most, indeed only, surprising aspect of this Budget was the lack of embarrassment shown by Mr Tsang when he announced he intended to extract from the populace $90 billion over the next four years - coupling that decision with the caution that it may be necessary to finance the railway development project to the tune of almost $50 billion.

That there is a concern that such a fundamental infrastructure project might not be privately financed surely begs an explanation.

The dangers of 'locked in surpluses,' which can never be released - to do so would entail deficit budgeting, something which although not forbidden under the Basic Law is unlikely ever to happen - seem to have been ignored.

When that $32 billion surplus materialises this time next year - and on past performance it is likely to be greater still, perhaps as much as $50 billion - it will be locked in forever.

Otherwise, it was a predictable Budget with inflation being the only real concerns and issues necessitating attention, with Mr Tsang proposing adjustments to several duties and rate bands.

His revamping of the middle range salaries tax brackets was long overdue, but the apparent capitulation to pressures on wine duty was a little puzzling.

The restatement of intent to maintain tight spending controls was equally welcome, but the desire to foster and encourage business did not materialise.