Budget Speech by the Financial Secretary (4)
55. The 2016-17 revised estimate on government revenue is $559.5 billion, 12 per cent or $61.3 billion higher than the original estimate. This is due mainly to the increase in revenue from land sales and stamp duty.
56. Revenue from land sales is $50.8 billion or 76 per cent higher than the original estimate, demonstrating yet again that land revenue has always been highly volatile and vulnerable to market fluctuations. It was only in 2015-16, when revenue from land sales was nearly $9.1 billion lower than estimated as some sites were unable to be sold. As a result of a period of hectic trading in the property market last year, stamp duty revenue for the whole year would be $8 billion or 16 per cent higher than estimated.
57. As for government expenditure, I forecast a revised estimate of $466.7 billion, 4.1 per cent or $20.2 billion lower than the original estimate. This is mainly because the $10 billion set aside for the Hospital Authority Public-Private Partnership Fund in the original estimate was advanced and allocated in 2015-16.
58. For 2016-17, I forecast a surplus of $92.8 billion. Fiscal reserves are expected to reach $935.7 billion by 31 March 2017.
Investing, Sharing and Caring
59. The Chief Executive has put forward in this year's Policy Address an array of measures on poverty alleviation, care for the elderly and support for the disadvantaged to improve the livelihood of the grassroots. The community looks to the Government for relief measures to ease the burden of the needy. Small and medium enterprises (SMEs) also look to the Government for help to cope with the unstable external environment and the escalating operating costs.
60. Having regard to the current economic situation, the complicated and uncertain global political and economic climate in the coming year, as well as the Government's fiscal surplus, I will introduce a series of measures that will on the one hand share the fruits of our economic development with members of the public, stimulate domestic demand, stabilise the economy and support the employment market and on the other hand, invest for the future by optimising the use of government resources. These measures include–
(a) reducing salaries tax and tax under personal assessment for 2016-17 by 75 per cent, subject to a ceiling of $20,000. The reduction will be reflected in the final tax payable for 2016-17. This proposal will benefit 1.84 million taxpayers and reduce government revenue by $16.4 billion;
(b) reducing profits tax for 2016-17 by 75 per cent, subject to a ceiling of $20,000. The reduction will be reflected in the final tax payable for 2016-17. This proposal will benefit 132 000 taxpayers and reduce government revenue by $1.9 billion;
(c) waiving rates for four quarters of 2017-18, subject to a ceiling of $1,000 per quarter for each rateable property. This proposal will benefit 3.21 million properties and reduce government revenue by $10.9 billion; and
(d) providing an extra allowance to social security recipients, equal to one month of the standard rate Comprehensive Social Security Assistance payments, Old Age Allowance (OAA), OALA or Disability Allowance. This will involve an additional expenditure of about $3.5 billion. Similar arrangements will apply to LIFA and Work Incentive Transport Subsidy, involving an additional expenditure of about $100 million.
61. In addition to the above one-off measures, I propose, after taking into account the Government's fiscal position in the short to medium term, the following five recurrent tax measures starting from 2017-18 so as to relieve the burden on taxpayers–
(a) widening the marginal bands for salaries tax from the current $40,000 to $45,000. This measure will reduce the tax burden of 1.3 million taxpayers and reduce tax revenue by $1.5 billion a year;
(b) raising the disabled dependant allowance from the current $66,000 to $75,000. This measure will benefit 35 000 taxpayers and reduce tax revenue by $50 million a year;
(c) raising the dependent brother/sister allowance from the current $33,000 to $37,500. This measure will benefit 23 800 taxpayers and reduce tax revenue by $13 million a year;
(d) extending the entitlement period for the tax reduction for home loan interest from 15 years of assessment to 20 while maintaining the current deduction ceiling of $100,000 a year. This proposal will reduce tax revenue by $430 million a year; and
(e) raising the deduction ceiling for self-education expenses from the current $80,000 to $100,000. This measure will benefit 3 500 taxpayers and reduce tax revenue by $8 million a year.
Support for Building Rehabilitation
62. The ageing of buildings is a thorny issue posing health and safety risks for the community. While owners are responsible for timely maintenance of their buildings, many of them find the relevant procedures daunting. To help property owners secure the necessary technical support, the Government will earmark $300 million to allow owners to participate in the "Smart Tender" Building Rehabilitation Facilitating Services Scheme run by the Urban Renewal Authority (URA) at a concessionary rate. It is estimated that owners of about 4 500 buildings will benefit from this initiative in the next five years.
63. This set of tax and short-term relief measures will cost $35.1 billion in total. Together with other spending initiatives in the Budget, they will have a fiscal stimulus effect of boosting GDP for 2017 by 1.1 per cent.
Support for Small and Medium Enterprises
64. The Government has always attached great importance to the development of SMEs and rendered them key assistance in tapping new markets and enhancing overall competitiveness. As the external economic environment is still fraught with uncertainties, we will continue to implement the following three support measures for local SMEs–
(a) extending the application period for the Dedicated Fund on Branding, Upgrading and Domestic Sales for five years to June 2022 to assist Hong Kong enterprises in furthering their business development in the Mainland;
(b) extending the application period for the special concessionary measures under the SME Financing Guarantee Scheme to 28 February 2018 to help enterprises tide over their liquidity needs; and
(c) proposing to strengthen the underwriting capacity of the Hong Kong Export Credit Insurance Corporation (ECIC) by raising the cap on the contingent liability of ECIC under contracts of insurance from $40 billion to $55 billion.
65. It is equally important to support the use of I&T by SMEs to enhance their competiveness. Last November, we introduced the Technology Voucher Programme to provide each eligible SME with funding of up to $200,000. The programme promotes the effective use of technological services and solutions among SMEs for better operational efficiency, and creates business opportunities for the I&T industry. Response has been encouraging with more than 900 SMEs having already registered their intention to participate in the programme.
First Registration Tax for Electric Vehicles
66. For years we have been actively promoting a wider use of electric vehicles to replace diesel and petrol vehicles so as to improve roadside air quality. Relevant measures include the introduction of First Registration Tax exemption for electric vehicles to narrow the price difference between these vehicles and the conventional ones. The waiver arrangement will expire on 31 March this year. In consideration of the overall growth of the private car fleet in recent years and the increasing acceptance of electric private cars by drivers, the Government has decided to revise the arrangement. From 1 April 2017 to 31 March 2018, First Registration Tax of electric commercial vehicles, motor cycles and motor tricycles will continue to be fully waived. However, the First Registration Tax waiver for electric private cars will be capped at $97,500. The Environment Bureau will announce the details.
Voluntary Health Insurance Scheme
67. To encourage the use of private healthcare services by the public, we will provide tax deduction for the purchase of regulated health insurance products, details of which are being examined by the Government.
Use of Surplus
68. Given the higher-than-expected surplus for this financial year, I will take a forward-looking approach to put $61 billion of the surplus to good use, by implementing the following–
(a) earmarking a total of $30 billion to strengthen elderly services and rehabilitation services for persons with disabilities. The Government will introduce measures to ensure the quality of residential care services and enhance community care services for the elderly. The Government will also put forward initiatives to enhance pre-school training, residential care, day care, community support, employment, barrier-free facilities and transportation for persons with disabilities, and to enable them to fully integrate into the community and enjoy equal opportunities;
(b) earmarking a total of $20 billion for sports development as announced in the Policy Address. To provide better community and sports facilities for public use, the Government will launch 26 projects in the coming five years to develop new or improve existing sports and recreation facilities in different districts. These include sports grounds, sports centres, football pitches, swimming pools, cycling grounds, tennis courts and open spaces;
(c) reserving $10 billion for supporting I&T development in Hong Kong; and
(d) deploying $1 billion for youth development, including the provision of $700 million for the Education Bureau to strengthen its efforts in promoting vocational and professional education and training (VPET), facilitating the training and professional development of principals and teachers, and enhancing support for local post-secondary students, including those pursuing self-financing post-secondary programmes. In addition, an allocation of $300 million will be provided in 2017-18 for the Home Affairs Bureau to expand the Multi-faceted Excellence Scholarship and the International Youth Exchange Programme, providing more chances for young people to enrich their exposure and broaden their horizons. On developing manpower resources, I will go into details later.
(To be continued.)
Ends/Wednesday, February 22, 2017
Issued at HKT 11:47
Issued at HKT 11:47
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