U.S. TREASURY'S BAKER OPPOSES TAX INCREASE

  U.S. Treasury Secretary James Baker
  said that he opposes a Federal tax increase to help reduce the
  budget deficit and favors spending cuts instead.
      "I don't think it's (a tax increase) is a very good idea
  and I'm quite confident that President Reagan doesn't think
  it's a very good idea," Baker said in an interview on Cable
  News Network's "Moneyline" television program.
      He said U.S. taxpayers are taxed at a rate of 19 pct of GNP
  which is traditionally where it has been, but the Federal
  Government is spending at a rate of 24 pct of GNP. Baker said
  spending cuts are clearly the best way to cut budget deficits.
      Baker said he opposed a stock transactions tax proposed by
  House Speaker Jim Wright, D-Tex, or other special taxes.
      "The stock transfer tax would be a particularly unfortunate
  approach to take," the Treasury Secretary said. He said the
  United States has some of the most efficient capital markets in
  the world and new taxes would impair efficiency.
      On the international front, Baker said banks must do more
  lending to developing countries. He was questioned about this
  after the Standard and Poor's Corp downgrading today of the
  debt of six major money center bank holding companies, largely
  because of their heavy developing nation loan exposure.
      Baker said that developing countries must adopt free market
  economic policies such as in the United States. He said capital
  flows will be required to support the needed reforms in the
  economic systems of those countries.
      The money must come either through equity or debt and Baker
  said that developing nations' "investment regimes do not
  support enough equity investment, so you've got to have some
  debt there."
      Commenting on the U.S. trade deficit, Baker said "I think
  you're going to see a 15 to 20 billion dlr reduction this
  year."
  

