Optimistic outlook: Financial Secretary Henry Tang says the operating deficit could be eliminated earlier than 2008-09 if the economy continues to pick up.

Financial Secretary Henry Tang says he hopes he can hand over a "better tuned budget" to his successor when his tenure as Financial Secretary in the second term of the Government ends in 2007.

Speaking on RTHK talk show, "Dialogue with Secretaries," today, Mr Tang said the Government's financial position has improved substantially with the strong economic upturn in 2004.

He expected fiscal balance to be restored in the operating account by 2008-09 as scheduled, and in the consolidated account by 2007-08, one year ahead of target.

He said the operating deficit could be eliminated earlier than 2008-09 if the economy continues to pick up.

Estate duty to be abolished

To implement the proposal to abolish estate duty, the Government will introduce a relevant bill to the Legislative Council later this month for deliberation, Mr Tang said.

Although the proposal will cost the Government $1.5 billion a year, the move will encourage the further development of the financial services industry and strengthen Hong Kong's position as an international financial centre, he said.

However, he said, as investment decisions are influenced by many factors, it is impossible to give an accurate estimate of the investment that will be induced if estate duty is abolished.

GST consultation to be launched after CE's election

Mr Tang said a proposed tax on plastic bags is only a preliminary idea, adding that it is a complex issue which has to be examined carefully.

As far as a goods and services tax is concerned, he said he planned to roll out the consultation some time this year.

"We will wait until the new Chief Executive is elected on July 10, and we will consult the new Chief Executive on the way forward," he said.

Hong Kong Port remains healthy

Commenting on the recent reports that Hong Kong has already lost the leading position for container terminals to  Singapore, Mr Tang said the figures between Hong Kong and Singapore have been oscillating because the figures are always close.

"I would like to think that Hong Kong's container terminal is complementary with the Shenzhen container terminal. You can see from the total figure that the growth is phenomenal. So I believe that as far as the region is concerned, Hong Kong and Shenzhen will continue to be the regional port of choice for the whole southern part of China."