SCMP Wednesday, March 7, 2001

Don't expect too much from 'difficult' Budget, warns Tsang


People should not expect too much in today's Budget, Financial Secretary Donald Tsang Yam-kuen said yesterday.
Displaying the yellow cover of his sixth and final Budget, called "Honing Our Strengths, Striving to Excel", Mr Tsang said it denoted bright sunlight, representing the recovering economy. The title referred to Hong Kong's strengths, such as developing a financial centre.
But in describing the Budget as his "most difficult", Mr Tsang warned: "The public should not place too many expectations on it, as the Budget is bound by the economy. It is neither over-conservative nor . . . over-ambitious.
"I put in my very best to make it as objective and as professional a piece of work as possible. The public has been fair on me and objective on my past Budgets. Any over-expectation on my [last] Budget is not fair."
He was tight-lipped on whether he would revise his estimate of a deficit of more than $10 billion for 2000-01.
He said the figure was relatively small compared to other countries.
The deficit for 1999-2000 was estimated to be $36.5 billion, but turned out to be a $10 billion surplus.
Saying his successor, Antony Leung Kam-chung, was wise, Mr Tsang said he would not leave behind any matters that Mr Leung would need to follow up. Mr Tsang is to take over as Chief Secretary for Administration in May after Anson Chan Fang On-sang retires.
A total of 5,400 copies of a glossy version of the Budget in English and Chinese costing $180 each, have been printed. A total of 143,760 free copies of a plain version will be distributed to the public.
Comparing his six Budgets, Mr Tsang said this last one had proved the most difficult, because the economic environment was complex and the markets were volatile.
"To prepare a Budget to be consistent with that external environment has been testing and challenging. Also, the public has not benefited from the recovering economy," he said.
Mr Tsang recalled that in his second Budget, in 1997, he faced the challenges of the coming handover and the complex political changes it brought. His third Budget had to tackle the financial turmoil and his fourth involved him raising tax rebates to counter the economic slowdown.
Professor Cheng Kwok-hon, head of economics at the University of Science and Technology, said he was not expecting any major gestures.
He said it was acceptable for profits tax to rise from 16 per cent to 16.5 per cent. "Though it is still lower than those of neighbouring countries, the room for increase is small, as even Singapore is cutting profits tax."
Professor Cheng also suggested cutting the salaries tax threshold so more people would have to pay. However, he said Mr Tsang would be under pressure from lawmakers not to take such a step, as many people had not benefited from the recovery.
Pang Tat-choi, chairman of the Senior Non-expatriate Officers' Association, said he expected the civil service recruitment freeze, introduced in 1999 after the financial turmoil, to be lifted.