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Revenue
63. I have pledged to leave wealth with the people where affordable. As the Government's financial position has improved following the strong recovery of our economy, I will propose a series of tax relief measures to share the fruits of economic prosperity with the community. However, in making any tax concessions, we should, as far as possible, avoid narrowing our tax base further and adhere to the principle of affordability.
Salaries Tax
Marginal Tax Bands and Tax Rates
64. I propose to revert the marginal bands and marginal rates for salaries tax to their 2002–03 levels. In other words, the band width will be increased from $30,000 to $35,000, and the two highest marginal tax rates will be reduced from 13 per cent and 19 per cent to 12 per cent and 17 per cent respectively. The basic allowance and standard rate will remain unchanged.
Child Allowance
65. To reduce the burden of parents in raising their children, I propose to increase the child allowance from $40,000 to $50,000 for each child. In addition, I propose to introduce an additional one-off child allowance of $50,000 for each child in the year of birth.
Deduction for Self-education Expenses
66. To facilitate the development of a knowledge-based economy, the Government has been encouraging employees to seek continual self-advancement through learning. To this end, I propose to increase the maximum amount of deduction for self-education expenses from $40,000 to $60,000.
67. The implementation of the foregoing tax concessions for individuals will start in 2007–08, reduce the tax burden of 1.1 million taxpayers and cost the Government about $4.9 billion a year.
Stamp Duty on Property Transactions
68. It is the aspiration of most middle-class families to purchase their own home. I therefore propose to reduce the rate of stamp duty on transactions of properties with a value between $1 million and $2 million from 0.75 per cent to a fixed amount of $100, which is the same level of duty as for properties with a value at or below $1 million. This proposal comes into immediate effect. It will benefit about 30 000 home buyers and cost the Government about $250 million a year.
Duty on Alcoholic Beverages
69. I believe that reducing the duty on alcoholic beverages will help promote the development of our catering industry, tourism and wholesale and retail alcoholic beverage trade, thereby benefiting the community at large. I propose that the duty rate on beer and other types of liquor containing not more than 30 per cent of alcohol be reduced from the current 40 per cent to 20 per cent, and that on wine from the current 80 per cent to 40 per cent. These proposals take immediate effect, and will cost the Government about $350 million a year.
70. During the Budget consultation period, some people suggested that the Budget should be more visionary: for instance, the duty on alcoholic beverages should be abolished to boost economic activities, increase employment and promote the development of Hong Kong as the region's wine exhibition, trading and logistics centre. I am willing to consider this innovative idea further if it enjoys broad community support.
Duty-free Tobacco and Alcoholic Beverage Allowances
71. Currently, the duty-free quantities of tobacco and liquor that local residents are allowed to bring in when entering Hong Kong are not the same as for visitors. I propose to align them. I propose to raise the duty-free quantity of alcoholic beverages that Hong Kong residents may bring back from the current 750 millilitres of still wine to one litre and to apply this to all liquors. I propose, on the other hand, to reduce the quantity of duty-free tobacco that visitors are allowed to bring into Hong Kong to that for local residents. For example, the quantity of duty-free cigarettes for a visitor would be reduced from the current ten packets to three. These proposals will take effect after the relevant subsidiary legislation has been passed.
One-off Measures
72. I also propose the following one-off measures to share wealth with the community.
Salaries Tax and Tax under Personal Assessment
73. I propose to waive 50 per cent of salaries tax and tax under personal assessment assessed for 2006–07, subject to a ceiling of $15,000. The amount waived will be deducted from the taxpayer's final tax payable for 2006–07. This proposal will cost the Government about $8.1 billion in 2007–08.
Rates
74. I propose to waive rates for the first two quarters of 2007–08, subject to a ceiling of $5,000 per quarter for each rateable tenement. It is expected that 99 per cent of domestic properties and 86 per cent of non-domestic properties will be subject to no rates in these two quarters. This proposal will cost the Government about $5.2 billion in 2007–08.
Additional Social Welfare Assistance
75. I have earlier made a series of specific proposals to help the disadvantaged, involving government expenditure amounting to approximately $900 million. To share the fruits of economic prosperity with recipients of CSSA and Social Security Allowance (SSA), I also propose to provide one additional month of standard rate CSSA payments for CSSA recipients and one additional month of allowance for SSA recipients. This proposal will benefit over a million people and cost the Government about $1.5 billion in 2007–08.
(To be continued)
Ends/Wednesday, February 28, 2007
Issued at HKT 11:55
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