Hong Kong Financial Secretary Henry Tang said here Saturday that Hong Kong is on track to achieve a surplus of 5.6 billion Hong Kong dollars (about 719.79 million U.S. dollars) as estimated in the 2006-07 Budget.

It means that this fiscal year's revenue may reach its target, Tang said, adding that discussions with the public will continue to explore options to widen the tax base.

He told a radio show that Hong Kong's economy is thriving, with higher-than-expected growth registered in the third quarter. Consumer price inflation is still mild and total employment has also reached an all-time high.

At the end of October, the deficit was lowered to 21.9 billion Hong Kong dollars (about 2.81 billion U.S. dollars) and fiscal reserves stood at 288.7 billion Hong Kong dollars (about 37.11 billion U.S. dollars). Government spending amounted to 132.8 billion Hong Kong dollars (about 17.07 billion U.S. dollars) and revenue 110.9 billion Hong Kong dollars (about 14.25 billion U.S. dollars). Given the outturn so far, Tang expressed confidence that Hong Kong is on track to achieve a surplus of 5.6 billion Hong Kong dollars (about 719.79 million U.S. dollars) as estimated in the 2006-07 Budget.

He said government spending remains stable, with education, security, welfare, medical and hygiene services accounted for 60 percent of the total spending.

While he is aware of people's aspiration for a tax cut, he said Hong Kong's economy is easily affected by global factors due to its highly open and externally oriented nature and caution must be exercised in fiscal management even if a surplus is achieved.

When asked if the salary tax level can be revert to the 2002-03 level, Tang said this suggestion requires more detailed study as the salary tax system is a complex one involving four key elements.

On tax reform, he said people are of the view that there is a pressing need to explore ways to widen the tax base in view of the aging population and globalization. However, they do not think the proposed sales tax is the best option.

Tang said the government will continue discussions with the public on the issue. While other options, such as progressive and capital gains taxes, will also be explored, he stressed any tax reform proposal should adhere to the principle of affordability and avoid double taxation. It should also not affect Hong Kong's competitive edge and market operation, he added.

Source: Xinhua