Call for Budget to reaffirm economic soundness

PUBLISHED : Monday, 26 January, 1998, 12:00am
UPDATED : Monday, 26 January, 1998, 12:00am

The Government should use next month's Budget to reassure the local and international business community about the soundness of the economy, according to certified public accountants' KPMG Peat Marwick.

Partner Jennifer Wong recommends a balanced budget with minor tax cuts to boost the flagging tourism sector.

She said a reduction in corporate profits tax would do little to boost Hong Kong's competitiveness.

'The message to the public should be that we are in good shape. Lots of people are saying there should be tax cuts. We do not think that would be appropriate. We prefer certainty,' Ms Wong said.

She forecast that the fiscal surplus next financial year would be between US$15 billion and $20 billion - about the mid-range of forecasts by analysts.

Allowances should be increased in line with inflation but estate and stamp duty rates should remain the same, she said.

'Because tourism is so bad, the Government needs to undertake a special programme to promote the industry,' Ms Wong said.

This could involve extending the hotel refurbishment allowance to restaurants and reducing the tax on hotel receipts by half a percentage point to 4.5 per cent.

She said a conservative, balanced budget would underline the health of public finances and the commitment to stability.