Prudent planning: Financial Secretary Henry Tang says the Government cannot be too aggressive in financial planning, adding Hong Kong's fiscal situation is still fragile despite the economic recovery.

Financial Secretary Henry Tang says the Government cannot be too aggressive in financial planning, adding Hong Kong's fiscal situation is still fragile despite the economic recovery.

Speaking at a post-Budget speech forum tonight, Mr Tang said although the Government has achieved fiscal balance, it must adopt a cautious attitude in returning wealth to the people.

He said the Government has done what it can by returning $2.7 billion to taxpayers. If the economic situation next year is better than expected, it will share more.

Government spending

Civil servants worked hard last year to restrain spending and this is the second time in over 50 years Government expenditure was lower than projected.

"In terms of controlling expenditure, we have done very well and it is something to be proud of."

He expects more expenditure next year because of Hong Kong's economic growth. Government spending should be adjusted according to economic growth, otherwise it will lag behind in services and competitiveness.

Speaking on the consultation on a goods and service tax, Mr Tang said it is the right time to discuss the issue because the city can have rational and objective discussion on something so controversial tax when things are going well.

Rational discussion

Noting most neighbouring countries have similar taxes, he said Hong Kong's business environment will not necessarily be undermined by a GST.

As the city does not have budgetary pressure, there will be some room to discuss the issue, he said. "It is a discussion on tax reform, rather than putting it as a way to raise new revenue.

"Since there will be a comprehensive consultation on the subject, it will be up to the next Government to decide whether to go ahead with GST. Even if the next Government decides to introduce GST, it will take at least three years to implement. Therefore there will be enough time for Hong Kong to get prepared for it."

On poverty, Mr Tang said providing employment is the best solution and he has proposed a series of measures to help the poor get jobs.