THE Preliminary Working Committee (PWC) yesterday warned against shrinking the territory's tax base while increasing public expenditure.
Co-convenor of the PWC economic subgroup, Nellie Fong Wong Kut-man, said members believed the Budget for 1995-96 focused too much on expenditure.
For three consecutive years, the Government had gone against the principle of keeping the increase in expenditure below GDP growth, she said.
The Basic Law said the future government should strive for balanced budgets, avoid deficits, keep budget growth in line with GDP growth and expenditure within the limits of revenue.
Mrs Fong would not say if she believed the Government's financial strategy went against the Basic Law, saying the mini-constitution took effect only in 1997.
Noting the tax base had narrowed significantly in the past few years, Mrs Fong said this could undermine Hong Kong's finances in the long-term.
