1. Main points Deficit this year is estimated to reach $78 million Deficit this year is estimated to reach $78 million Deadline to balance the books deferred from 2006-07 to2008-09 Deadline to balance the books deferred from 2006-07 to2008-09

2. Operating expenditure to be reduced to $200 billion by 2008-09 Operating expenditure to be reduced to $200 billion by 2008-09 ---Cut public spending by 11% over the next 5 financial year (less than 2.5%per year) ---Cutting on the expenditure of infrastructure projects ---defer some capital works until the fiscal environment improves.

3. Revenue to rise $200 billion by 2008-09 Revenue to rise $200 billion by 2008-09 ---Issuing bonds ---Selling or securitizing assets ---Securitization of revenues ---sale of loans ---privatisation of the Airport Authority ---desirability of proceeding with the rail merger.

4. Showing how the operating expenditure and revenue come to the fiscal balance by the year 2008-2009

5. Shelved the controversial boarder tax Shelved the controversial boarder tax Introduction of goods & service tax to be decided later,not until deflation eases Introduction of goods & service tax to be decided later,not until deflation eases

6. Questions When is the target of balancing the budget? 2008-2009 What kind of tax which introduce on goods and services is said to be a reasonable step forward? Sales tax. It will be decided later, but not until deflation eases. Is it an indirect or direct tax? Indirect tax. Which tax is shelved now? Land departure tax/ controversial border crossing tax. Is it an indirect or direct tax? Indirect tax.

7. The Government decides to cut their spending by 11% through how many years? Which fiscal year starts? 5 years. An average of 2.5% per year. 2004-2005. What is the budget this year, deficit or surplus? For how much? Deficit of $780 billions. Mr. Henry Tang indicated he would proceed with other fund raising measures (other than taxes). Do you know what they are? Privatisation of Airport Authority.Privatisation of Airport Authority. Issuing bonds.Issuing bonds. If there are further pay cut for the civil servants. What will this result in? undermine the quality of public services. (any acceptable answer.)undermine the quality of public services. (any acceptable answer.)

8. Group discussion: Do you agree with the introduction of goods and services tax? Give reasons. Are there any potential income sources that the government can explore?