Future tax cuts possible 'if surplus holds'
Tax cuts might be considered if there was a continued substantial government surplus, an SAR official said yesterday.
Secretary for Treasury Kwong Ki-chi said: 'If we anticipate a continued substantial surplus in future years, one way of dealing with it is to consider returning part of that to the community in the form of a concession in revenue.' The total financial reserves, including the Land Fund, stand at $382 billion.
Mr Kwong was confident there was enough money to fulfil the pledges made by Tung Chee-hwa in his inaugural speech.
Among the pledges were strengthening elderly care services and supplying more land from reclamation for housing.
Mr Kwong said the elderly were a priority area for the allocation of resources, but refused to be drawn on how much would be spent on the elderly in total expenditure in the 1998-99 Budget, only saying it would be addressed when Mr Tung made his policy speech in October.
'We are confident that we can achieve the promise made by Mr Tung to improve overall public services,' he said.
Mr Kwong believed that it was not necessary to cut expenditure in other policy areas as long as government expenditure was within the economic growth trend.
Commenting on the balance of the 1996-97 Budget, which has a surplus of $25.7 billion, far more than the revised estimate of $15 billion, Mr Kwong denied that officials had underestimated it deliberately.
'It was partly due to the unpredictable large increase in stamp duty revenue of $4 billion in the last quarter,' he said. The land premium had also been volatile.
For the past five to 10 years, land revenue accounted for between 10 and 14 per cent of total revenue, but it surged to 20 per cent last year, he said.
It had also accounted for one to five per cent of Gross Domestic Product in the past 10 years.
The Provisional Legislative Council is to be asked to approve a payment to Beijing for financing the setting up of the SAR, including the council, Mr Kwong said.
The central Government agreed to pay in advance and be repaid when the SAR Government was set up.
Mr Kwong said all the expenditure on PLA troops stationed in the SAR would be met by Beijing.