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The Financial Secretary, Mr John C Tsang, has announced $38.8 billion in relief measures in the 2016-17 Budget today (February 24) to help business and residents weather looming lacklustre economic prospects and to stimulate consumption.
"It is the duty of the Government to take on challenges in our society. As Financial Secretary, it is my duty to mobilise resources effectively to maintain Hong Kong's economic development and fiscal health; to support local enterprises, in particular the small and medium enterprises (SMEs), to cope with economic volatilities; and to safeguard the jobs of workers," he said.
"The local economy is laden with risks in the year ahead; the outlook is far from promising. We need to take timely and appropriate measures to stimulate the economy, support local enterprises and safeguard employment."
Mr Tsang said Hong Kong's 320 000 SMEs employ 50 per cent of the private sector workforce.
Mr Tsang said he would reduce profits tax for 2015-16 by 75 per cent, subject to a ceiling of $20,000. This proposal will benefit 130 000 taxpayers and reduce government revenue by $1.9 billion.
Business registration fees will also be waived for 2016-17 to benefit 1.3 million business operators. This proposal will reduce government revenue by $2.5 billion.
To enhance the long-term competitiveness of SMEs, a Pilot Technology Voucher Programme under the Innovation and Technology Fund will be launched to subsidise the use of technological services and solutions to improve productivity and upgrade or transform business processes.
The three-year pilot programme will provide, on a matching basis, a maximum subsidy of $200,000 for each eligible SME. Estimated expenditure is $500 million.
To stabilise the employment market and help SMEs tide over liquidity needs, he introduced three measures:
* Extend the application period for the "special concessionary measures" under the SME Financing Guarantee Scheme to February 28, 2017;
* Reduce the annual guarantee fee rate for the measures by 10 per cent; and
* Remove the minimum guarantee fee for the measures.
Mr Tsang unveiled a number of measures to help the tourism industry, which contributes 5 per cent of Gross Domestic Product (GDP) and employs 270 000 people and is entering a period of consolidation.
"In view of the changing mix and spending pattern of visitors, we need to review the development strategy of our tourism industry," he said.
"Other than seeking growth in visitor numbers, we should move towards diversified and quality-driven high value-added services, with a view to attracting more high-spending overnight visitors to Hong Kong.
"In light of this new situation, I shall launch short, medium and long-term measures to reduce the industry's costs of operation and enhance Hong Kong's attractiveness and competitiveness."
Three short-term measures costing $140 million would be introduced:
* Waive licence fees for 1 800 travel agents for one year;
* Waive licence fees for 2 000 hotels and guesthouses for one year; and
* Waive licence fees for restaurants and hawkers and fees for restricted food permits for one year, benefiting 27 000 restaurants and operators.
Mr Tsang allocated $240 million to launch five medium-term measures:
* Expand the scale of major events this year, including the inaugural Formula E Championship, the Hong Kong Wine & Dine Festival, the Hong Kong Cyclothon and additional Pulse 3D Light Shows at the Hong Kong Cultural Centre;
* Through the Hong Kong Tourism Board (HKTB), repackage Hong Kong's tourism image;
* Through the HKTB, assist the industry to open up new visitor sources;
* Help small and medium-sized travel agents make use of information technology to enhance the competitiveness of the industry; and
* Continue to promote Hong Kong's natural scenery as well as its unique history and culture.
In the long run, tourism infrastructure will continue to be upgraded, including Hong Kong Disneyland, Ocean Park, tourism projects at Kai Tak and Lantau, and new conference facilities above the proposed Exhibition Station of the Shatin to Central Link.
To ease the financial burden of residents and stimulate spending, the Financial Secretary announced three short-term relief measures:
* Reduce salaries tax and tax under personal assessment for 2015-16 by 75 per cent, subject to a ceiling of $20,000. This will benefit 1.96 million taxpayers and reduce government revenue by $17 billion;
* Waive rates for four quarters of 2016-17, subject to a ceiling of $1,000 per quarter for each rateable property. This will benefit 3.17 million properties and reduce government revenue by $11 billion; and
* Provide an extra one-month allowance to those receiving Comprehensive Social Security Assistance payments, Old Age Allowance, Old Age Living Allowance or Disability Allowance. This will involve an additional expenditure of $2.8 billion.
The Financial Secretary announced a number of recurrent measures to benefit taxpayers, including the following:
* Raise the basic allowance and single parent allowance from $120,000 to $132,000 and the married person's allowance from $240,000 to $264,000. These proposals will benefit 1.93 million taxpayers and reduce tax revenue by $2.9 billion a year; and
* Increase the following allowances for maintaining a dependent parent or grandparent, benefiting 600 000 taxpayers and reducing tax revenue by $860 million a year:
(a) Allowance for maintaining a dependent parent or grandparent aged 60 or above: Increase from $40,000 to $46,000 (the same increase applies to the additional allowance for taxpayers residing with these parents or grandparents continuously throughout the year);
(b) Allowance for maintaining a dependent parent or grandparent aged between 55 and 59: Increase from $20,000 to $23,000 (the same increase applies to the additional allowance for taxpayers residing with these parents or grandparents continuously throughout the year); and
(c) Deduction ceiling for elderly residential care expenses for taxpayers whose parents or grandparents are admitted to residential care homes: Increase from $80,000 to $92,000.
"This set of tax and short-term relief measures will cost $38.8 billion in total," he said.
"Together with other spending initiatives in the Budget, they will have a fiscal stimulus effect of boosting GDP for 2016 by 1.1 per cent.
"I have to emphasise that relief measures are different from recurrent expenditure.
"Relief measures aim to help citizens cope with the current financial pressure and serve as a counter-cyclical measure to preserve economic stability and safeguard employment. These are subject to adjustments in light of the economic and financial position of the year.
"Recurrent expenditure is deployed for new policies, new services or enhancement of existing services."
Ends/Wednesday, February 24, 2016
Issued at HKT 12:32
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