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A buoyant economy helped to significantly boost Government revenues in 2010-11, according to figures released today (February 23) by the Financial Secretary, Mr John C Tsang, in the 2011-12 Budget.
Mr Tsang said rising income levels had generated $140.5 billion in revenues from profits tax and salaries tax in 2010-11 - $22.2 billion higher than original estimates.
The stock and property markets brought in much higher than expected revenues from stamp duty ¡V an estimated $51 billion, which was $21 billion higher than the original estimate.
Land revenues jumped to $62 billion - $27.9 billion higher than original estimates ¡V because developers had been active in triggering sites for sale, bidding for land and applying for change of land use. The Government also put sites on the market in a bid to meet development needs.
Total revenue for the 2010-11 financial year reached $374.8 billion (operating revenue of $301.5 billion and capital revenue of $73.3 billion) - $82.8 billion higher than the original estimate.
Government expenditure for 2010-11 is estimated to reach $303.5 billion, which is $13.7 billion less than the original estimate.
A consolidated surplus of $71.3 billion is forecast for 2010-11, comprising a $60.7 billion surplus in the Operating Account and a 10.6 billion surplus in the capital account.
By March 31, 2011, fiscal reserves are expected to reach $591.6 billion, equivalent to 23 months of Government expenditure, or 34 per cent of GDP.
For 2011-12, total Government spending is estimated to reach $371.1 billion ¡V an increase of $67.6 billion over 2010-11.
Operating expenditure for 2011-12 is estimated to be $298 billion, including recurrent expenditure of more than $242 billion of which 56.4 per cent will be spent on the three policy areas of education, health and social welfare.
¡§Recurrent expenditure for 2011-12 will increase by nearly 8 per cent when compared with 2010-11. This reflects that the Government is always committed to caring for people¡¦s livelihood,¡¨ said Mr Tsang.
¡§Taking into account the provision for meeting service growth, and measures proposed in the Policy Address and in this Budget, operating expenditure for 2011-12 will be higher than that for 2010-2011 by 24 per cent.¡¨
Capital expenditure is forecast at $73.1 billion, which includes $58.3 billion on capital works.
Total Government revenue for 2011-12 is estimated to reach $375 billion.
A consolidated surplus of $3.9 billion ($3.6 billion in Operating Account and $300 million in Capital Account) is forecast for 2011-12.
Fiscal reserves are estimated to reach $595.5 billion by end-March 2012, the equivalent of 19 months of Government expenditure, or 32 per cent of GDP.
In the medium term, average growth rate is forecast at 4 per cent in real terms for the period 2012-15, with underlying inflation averaging 3.5 per cent.
An annual surplus is forecast in the Operating Account between 2012-13 and 2015-16.
Fiscal reserves are estimated to reach approximately $697.7 billion by end-March 2016, representing about 30 per cent of GDP and equivalent to 20 months of government expenditure. This figure includes the $50 billion previously pledged for the implementation of health care reform measures.
Mr Tsang said that because of this year¡¦s socio-economic conditions, he was proposing in this Budget to increase spending on areas related to people¡¦s livelihood, such as education, health care and social welfare.
¡§We also seek to alleviate the inflationary pressure felt by our people, reduce the risk of asset-price bubbles, and use public resources to invest in the future,¡¨ he said.
¡§People come first in all our policies. No matter how our economy fares, we cherish each and every member of our community. We always remind ourselves that the social and economic problems facing us are not just figures on paper, but the livelihood and well-being of every single citizen and family.¡¨
Mr Tsang said Hong Kong¡¦s fiscal reserves had provided a buffer to alleviate the impact of economic cycles on people¡¦s livelihood.
¡§Apart from being used to meet daily operational requirements, fiscal reserves can also be drawn on in contingencies, allowing us to maintain our expenditure at a relatively steady level when Government revenue is affected by economic downturns,¡¨ he said.
¡§Fiscal reserves are also an important component of the Exchange Fund. The fiscal reserves placed with the Exchange Fund help reinforce public confidence in the Hong Kong dollar and our monetary stability.
¡§In 2010-11, the investment income of the fiscal reserves accounted for about one tenth of government revenue. It is an important source of revenue for us.¡¨
He said that maintaining adequate fiscal reserves did not mean the Government was reluctant to increase expenditure.
¡§The revised estimate of government expenditure for 2010-11 reaches over $300 billion, an increase of over 29 per cent compared with 2007-08,¡¨ he said.
¡§This increase is greater than the 8.2 per cent nominal GDP growth. I will make good use of our valuable fiscal reserves to respond positively to the aspirations of the community and lay a solid foundation for our economy to meet future challenges.¡¨
Ends/Wednesday, February 23, 2011
Issued at HKT 13:11
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