The compiling of the 2007-2008 Budget will be based on the principle of prudent management of public finances and provide flexibility for the Hong Kong Special Administrative Region government of the next term, Financial Secretary Henry Tang said Tuesday.

Speaking on a radio talk show Tuesday, Tang said he understood people have high expectations for the 2007-2008 Budget and he would strike a balance between different parties' interests when devising it.

Tang said although Hong Kong's recent economic development is good, the city should keep a clear mind when facing future challenges.

In response to the requests for reverting the salary tax to the 2002-2003 level, Tang said the four elements which determine the tax, including allowances, the level of tax rates and the standard rate, have been changed since 2002-2003.

"Even if there is room for adjustment, we believe that there is no need to change all the four elements simultaneously," he said.

When asked whether owners of unleased property could be exempted from paying rates, the Financial Secretary said he would consider the suggestion.

On wine tax, Tang said his personal interest will not interfere with his decision in devising budgetary policies. He will consider three elements when making the decision, including whether the measure will create job opportunities, promote Hong Kong's economy and enhance the development of tourism, and the exhibition and conference industries.

When asked whether other cities on China's mainland will replace Hong Kong's role as the country's financial center, Tang said the Chinese mainland should be able to have more than one such centers.

Noting Hong Kong and other mainland cities are at different development stages, Tang believed they could support each other and create a win-win situation.

Source: Xinhua