Academics split on 'miracle' cure

PUBLISHED : Thursday, 19 February, 1998, 12:00am
UPDATED : Thursday, 19 February, 1998, 12:00am

Academics said the Budget had failed to alleviate economic difficulties or boost public confidence.

Tsang Shu-ki, professor of economics at Baptist University, said the Budget appeared to be 'some sort of miracle' by increasing expenditure, reducing tax and maintaining the surplus at the same time.

But he attributed such an impression to the good engineering skills of the Financial Secretary, who had dampened expectations.

'When you look at the details, tax cuts are relatively limited,' he said referring to the half-percentage point cuts in profits tax and rates.

Professor Tsang said the Budget would not relieve the difficulties entrepreneurs were facing.

'Are they suggesting a tax reduction to buy computers when many businesses are going bankrupt?' he asked.

The associate director of the Chinese University's Institute of Asia-Pacific Studies, Professor Lau Siu-kai, said the Budget would not boost confidence.

'It is a Budget lacking depth. The tone is too optimistic. Mr Tsang wants to convince us it will be OK next year, so there's no need to do too much,' he said.

He said Mr Tsang was depending too much on taxation policy to solve problems triggered by the market crisis.

People who did not fall within the tax net, for example the unemployed and the poor, would not benefit, he said.

However, Professor Sung Yun-wing, the head of the Economics Department at Chinese University, thought the Budget would please everyone.

'Tax cuts are comprehensive, the number of people benefiting is large and it takes care of sectors suffering from the economic slowdown such as the tourist industry,' he said.

The Budget included forward-looking suggestions to strengthen competitiveness and adjust the pricing structure, Professor Sung said, but he thought the economic growth estimate was too optimistic.