Feasible and practical: Financial Secretary Henry Tang (right) says it is his duty to formulate a "feasible and practical" Budget for Hong Kong.

Financial Secretary Henry Tang says it is his duty to formulate a "feasible and practical" Budget for Hong Kong.

After his Budget address today, he said electoral arrangements for 2007 and the debate on patriotism had no bearing on the Budget's formulation.

Mr Tang also said he does not think the issuance of Government bonds will affect Hong Kong's credit rating as it is a commonly accepted practice.

Gov't bonds will not affect credit rating

The purpose of issuing Government bonds, he said, is to develop a debt market because all the necessary infrastructure, both soft and hardware, is already in place.

The bid will also offer many small depositors an alternative investment vehicle to gain a higher interest income, as well as enable a greater degree of flexibility in the Government's assets sales programme.

Secretary for Financial Services & the Treasury Frederick Ma said both global and local bonds should be issued in future. Entrance fees have not been decided, but should be at a similar level to those in the market.

30% of respondents support GST

On the study of the Goods & Services Tax, Mr Tang said while the issue is controversial, there has been very positive and active discussion in the community. He also noted an opinion poll in which about 30% of respondents supported it.

He said the Government has not made a decision on the issue and has no timetable for its implementation, because it wants to consult the community first. He hopes it will widen the tax base and be a stable source of revenue.

Gov't determined to contain operating expenditure

Mr Tang said the Government is determined and able to contain its operating expenditure.

He considered a number of factors when formulating the budget, that include:

* complying with the concept of prudent financial arrangement;

* maintaining the public service standard; and,

* complying with the principle of cutting down the Government's expenditure before raising revenue.

His move to reduce expenditure from $212 billion for 2004-05 to $200 billion for 2008-09 shows the Government's determination in tackling the problem.

He said the budget is proactive and pragmatic and balances the interests of all.

Noting Hong Kong civil servants are efficient, clean and responsible, he promised to discuss the issue of streamlining the Government's structure with them.