********************************************
Relief Measures
145. The Chief Executive has put forth in this year's Policy Address an array of measures to help the needy and the disadvantaged, and improve the livelihood of the grassroots. Public response to the measures has been positive. I am aware of further requests seeking additional relief for the other sectors of the community, such as support for parents, children's education, self-advancement expenses, wage and rental expenses on the part of SMEs.
146. I am also aware that the public has expressed concern about Government's choice between recurrent and one-off relief measures. These measures serve different purposes. Recurrent measures may be deployed for new policies, new services or the enhancement of existing services. One-off relief measures, on the other hand, aim primarily at helping the public to cope with short-term financial pressure, or as a counter-cyclical measure to preserve economic stability and short-term employment. Unlike recurrent measures, one-off measures are necessarily subject to adjustment in the light of the economic and financial position of the year.
147. When drawing up the one-off relief measures to be included in this Budget, I have taken into account the series of recurrent measures introduced by Government earlier to help the grassroots, the economic outlook for the next financial year, especially a slight slowdown in inflation, and the financial position in the current financial year. I now propose to launch five measures involving about $20 billion. Together with other measures in this Budget, the fiscal stimulus effect on GDP will be 0.7 percentage point. These five measures include -
(a) reducing salaries tax and tax under personal assessment for 2013-14 by 75 per cent, subject to a ceiling of $10,000. This proposal will benefit 1.74 million taxpayers in the territory. The reduction will be reflected in the final tax payable for 2013-14. This will cost the Government about $9.2 billion;
(b) reducing profits tax for 2013-14 by 75 per cent, subject to a ceiling of $10,000. This proposal will benefit 126 000 taxpayers in the territory. The reduction will be reflected in the final tax payable for 2013-14. This will cost Government about $1 billion;
(c) waiving rates for the first two quarters of 2014-15, subject to a ceiling of $1,500 per quarter for each rateable property. It is estimated to benefit around 3.1 million properties, and will cost Government about $6.1 billion;
(d) paying one month's rent for public housing tenants. Government will pay one month's base rent for tenants who are required to pay extra rent to the Housing Authority. For non-elderly tenants of the Hong Kong Housing Society's Group B estates, Government will pay two-thirds of their rent for one month. This measure will involve $1 billion; and
(e) providing an extra allowance to Comprehensive Social Security Assistance (CSSA) recipients, equal to one month of the standard rate CSSA payments, and an extra allowance to Old Age Allowance, Old Age Living Allowance and Disability Allowance recipients, equal to one month of the allowances. This will involve an additional expenditure of $2.7 billion.
148. In addition to one-off measures, I propose to increase the allowances for maintaining dependent parents or grandparents to alleviate taxpaying providers' burden. The three measures, which will benefit about 550 000 taxpayers and cost Government about $300 million a year, are -
(a) increasing the allowance for maintaining a dependent parent or grandparent aged 60 or above from $38,000 to $40,000. The same increase applies to the additional allowance for taxpayers residing with these parents or grandparents continuously throughout the year;
(b) increasing the allowance for maintaining a dependent parent or grandparent aged between 55 and 59 from $19,000 to $20,000. The same increase applies to the additional allowance for taxpayers residing with these parents or grandparents continuously throughout the year; and
(c) for taxpayers whose parents or grandparents are admitted to residential care homes, the deduction ceiling for elderly residential care expenses will be raised from the current $76,000 to $80,000.
Revised Estimates for 2013-14
149. The revised estimate for government revenue for 2013-14 is $447.8 billion, $12.7 billion or 2.9 per cent higher than the original estimate. Amid uncertain global economic situation, revenue from profits tax is $11.5 billion or 8.8 per cent less than originally estimated while that from salaries tax is $4 billion or 7.8 per cent higher than the original estimate. Last year, Government put additional sites on the market on a quarterly basis to augment land supply. As a result, the sale of land brought in $84.1 billion, about $15.1 billion or 21.9 per cent higher than the original estimate. I forecast that the revised estimate for government expenditure will be $435.8 billion, which is $4.2 billion lower than the original estimate.
150. For 2013-14, I forecast a surplus of $12 billion. By March 31, 2014, fiscal reserves are expected to reach $745.9 billion.
(To be continued)
Ends/Wednesday, February 26, 2014
Issued at HKT 12:28
NNNN
