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FS unveils spending hikes, tax cuts in Budget

     The Financial Secretary, Mr John C Tsang, has today (February 1) in his annual Budget proposed a wide range of tax concessions in the face of stiff economic headwinds as well as healthcare and education initiatives to support the community.

     "Apart from the cushion rendered to the economy, these measures will also help reduce the pressure of inflation on people in need, enabling our community to move on steadily," Mr Tsang said.

     The relief measures include:

* Reducing salaries tax and tax under personal assessment for the 2011-12 assessment year by 75 per cent, subject to a ceiling of $12,000. This will benefit 1.5 million taxpayers and cost the Government $8.9 billion;

* Granting each residential electricity account a subsidy of $1,800. Some 2.5 million households will benefit from the subsidy;

* Waiving rates for 2012-13, subject to a ceiling of $2,500 per quarter for each rateable property. This proposal will cost the Government $11.7 billion;

* Providing an extra one month allowance to recipients of Comprehensive Social Security Assistance (CSSA), Old Age Allowance and Disability Allowance. This proposal will cost the Government $2.1 billion;

* Paying two months' rent for public housing tenants.

     To ease the financial burden of fresh graduates, Mr Tsang proposed giving all student loan borrowers, who complete their studies in 2012, the option to start repaying their student loans one year after completion of studies.

     The Financial Secretary introduced a series of tax relief measures aimed at easing the burden on the middle class. These include:

* Raising the basic allowance and the single parent allowance from $108,000 to $120,000; and increasing the married person's allowance from $216,000 to $240,000;

* Increasing the allowance for maintaining a dependent parent or grandparent aged 60 or above from $36,000 to $38,000;

* Increasing the additional allowance for a taxpayer residing with their parents or grandparents from $36,000 to $38,000;

* Increasing the allowance for maintaining a dependent parent or grandparent aged between 55 and 59 from $18,000 to $19,000;

* Raising the child allowance from the current $60,000 to $63,000 for each child;

* Raising the dependent brother/sister allowance from $30,000 to $33,000;

* Raising the disabled dependant allowance from the current $60,000 to $66,000.

     Mr Tsang proposed increasing the maximum annual tax deduction for mandatory contributions to Mandatory Provident Fund schemes from $12,000 to $15,000.

     "I believe that the above adjustments to tax allowances and deductions are adequate to take care of taxpayers¡¦ basic needs and additional financial burden arising from family responsibilities," Mr Tsang said.

     The Financial Secretary said recurrent expenditure on education would increase by 7 per cent to nearly $60 billion in 2012-13.

     This includes earmarking $1 billion to implement a new programme modelled on Project Yi Jin under the new senior secondary academic structure.

     "The aim is to provide an alternative pathway for students to acquire a formal qualification other than the Hong Kong Diploma of Secondary Education examinations to be held for the first time this year," Mr Tsang said.

     The Financial Secretary set aside $2.5 billion to launch the sixth Matching Grant Scheme (MGS) in the post-secondary education sector.

     "For the first time, the proposed sixth MGS will cover all statutory and approved post-secondary institutions to further consolidate their development," Mr Tsang said.

     He also earmarked $1 billion for both the HKSAR Government Scholarship Fund and the Self-financing Post-secondary Education Fund.

     "Injecting $2 billion into the two funds will give recognition to more students with outstanding academic performance or remarkable achievements in other areas such as sports, fine art, science and technology and community services," Mr Tsang said.

     Recurrent expenditure on social welfare for 2012-13 will reach $44 billion, a 9 per cent increase over 2011-12.

     On caring for the elderly, the Financial Secretary proposed increasing funding for Dementia Supplement by $137 million.

     He also allocated $900 million to improve the physical settings and facilities of as many as 250 district elderly care centres.

     A further measure is to inject $10 billion into The Samaritan Fund which provides financial assistance to patients in need when purchasing drugs and medical items.

     "The injection will also give the Fund more headroom to increase the types of subsidised drugs in accordance with clinical protocols and scientific evidence, benefiting more people in need," said Mr Tsang.

     Health care spending will reach $45 billion in 2012-13, an increase of over 40 per cent when compared with 2007-08, according to the Financial Secretary.

     In the coming year, $2.2 billion will be set aside for Hospital Authority projects, including the expansion of United Christian Hospital and redevelopment of Kwong Wah and Queen Mary Hospitals. Another $500 million has been allocated to acquire and upgrade medical equipment for public hospitals.

     Mr Tsang said the Government planned to introduce the $2 concessionary public transport fare scheme for the elderly and people with disabilities in 2012-13.

     "Trust and co-operation are keys to the functioning of a modern economy," Mr Tsang said.

     "With trust and co-operation come reduced transaction costs, increased opportunities for economic development and social advance.

     "Without them, crises and shocks may easily make us stumble.

     "That is why we always want the 'big society' to play its part in fostering opportunity for community co-operation and solving social problems by engaging public resources to support community efforts."

     Full details of the 2012-13 Budget are available at:

Ends/Wednesday, February 1, 2012
Issued at HKT 13:38


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