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Hong Kong Financial Secretary Henry Tang fields questions by the media on his 2007-08 Budget. |
Hong Kong Financial Secretary Henry Tang recently unveiled a package of budget measures designed to “share the fruits of economic prosperity with the community” and support Hong Kong’s ongoing economic development and job creation.
The centerpiece of the Budget is a US$2.56 billion package of tax concessions and other one-off relief measures, including US$628.2 million in salaries tax cuts, US$32.05 million reduction in stamp duties on property transactions, US$1.03 billion in salaries tax rebates, US$666.66 million in rates waivers and US$192.3 million in additional social security payments.
The Financial Secretary also will allocate approximately US$115.38 million to provide additional assistance to the disadvantaged. Other major initiatives to promote the economy and employment include:
- US$397.43 million to upgrade air traffic-control facilities and build a new Civil Aviation Department headquarters at the airport
- Reducing by half the duty rates on wine, beer and other drinks containing less than 30% alcohol (cutting revenue by US$44.87 million a year)
- US$38.46 million to help finance film production and overcome the shortage of film talent
- US$26.92 million to install WiFi networks, enabling free public Internet access in such government facilities as libraries, parks and community halls
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Hong Kong's GDP grew 6.8% in 2006. GDP growth for 2007 is forecast at 4.5% to 5.5%, with a trend growth rate of 4.5% a year from 2008 to 2011. |
Mr. Tang said the government’s fiscal position has markedly improved as a result of the strong economic recovery.
He forecast a consolidated surplus of US$7.06 billion for 2006-07, much higher than the original forecast.
“Due to our economy’s better-than-expected performance over the past 12 months,” he said, “investment income and revenue from land premiums, stamp duty, profits tax and salaries tax alone are about US$3.97 billion higher than the original estimates.”
Mr. Tang reported that GDP grew 6.8% in 2006, significantly more than the 4% to 5% originally forecast by the market and the government.
GDP is expected to grow 4.5% to 5.5% in 2007, with a projected annual growth rate of 4.5% from 2008 to 2011.
Total government expenditures for 2007-08 will be US$31.84 billion, up US$358.97 million (1.1%), from the 2006-07 original estimates. Education, social welfare, health and security will account for more than 60% of total expenditures.
To complement the creation of new posts resulting from various policy initiatives and to pre-empt possible succession problems arising in the civil service, Mr. Tang said the government will resume open recruitment of civil servants beginning in the next financial year.
He pledged to maintain strict fiscal discipline and manage public finances prudently.
Mr. Tang said the government will continue to earmark an average US$3.71 billion annually for infrastructure projects over the next few years.
He said upcoming major projects, such as the Tamar development, improvement works for the 2009 East Asian Games sports facilities and water mains replacement and drainage works in various districts, will create approximately 23,000 jobs for the construction industry.
An operating surplus of US$923.07 million and a consolidated surplus of US$3.25 billion are forecast for 2007-08.
The Financial Secretary said Hong Kong’s economy has staged a strong recovery since mid-2003, when the SARS outbreak hit the territory.
He said employment is now at a record 3.5 million — 310,000 more than in 2003. Unemployment has fallen from a peak of 8.5% in mid-2003 to a six-year low of 4.4%.
Total retail sales are up 23% since 2003; overall investment grew 8% in 2006 — the biggest rise since 2000. In addition, as of mid-February, stock market capitalization was 300% higher than in 2003; visitor arrivals topped 25 million in 2006 — up 60% over 2003; and negative equity cases had dropped from more than 100,000 to 8,400 by end-2006.
Mr. Tang said that when he took over as Financial Secretary in August 2003, he needed to address the government’s serious deficit problem and restore the health of public finances.
He said that due to the combined efforts of the government and the community, fiscal targets were achieved in 2005-06, three years ahead of schedule.
Operating expenditures have been reduced to less than US$25.64 billion, fiscal balance has been restored in both the Operating and Consolidated accounts and public expenditure has been reduced to less than 20% of GDP.
Mr. Tang said Hong Kong’s ability to undergo continuous economic restructuring is a key element underpinning the territory’s competitiveness, and its economic integration with the Mainland is pivotal to Hong Kong’s future development.
“Hong Kong’s restructuring should complement the economic development of the Mainland and create a ‘win-win’ situation.”
To sustain future economic development and creation of jobs, the Financial Secretary pledged to continue to promote the development of the financial services sector, to enhance the competitiveness of the trade and logistics industry and to continue to promote the development of tourism infrastructure.
Mr. Tang said the government will continue to improve Hong Kong’s business environment through removing barriers, promoting fair competition, nurturing and attracting talent, supporting scientific and technological research and encouraging innovation and creativity.
Details of the 2007-08 Budget can be found on the Web site: [http://www.budget.gov.hk/].
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