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By Chen Jipeng, Xinhua
HONG KONG: The Hong Kong Special
Administrative Region (HKSAR) government, with a record budget
surplus in hand, is trying to use taxpayers’ money to maintain
sustainable economic growth while trying to “leave wealth with the
people.”
Presenting his maiden budget
Wednesday, HKSAR Financial Secretary John Tsang proposed generous
tax rebates and extra allowances, giving back around 40 billion HK
dollars ($5.13 billion) out of a record 115.6-billion-HK-dollar
($14.82 billion) budget surplus to the taxpayers, the elders and the
underprivileged.
The surplus will be 4.5 times of
last year’s forecast and equal to 7.2 percent of Hong Kong’s
gross domestic product, bringing the fiscal reserves to 484.9
billion HK dollars ($62.17 billion) by the end of the fiscal year
2007-2008 which ends on March 31.
Hong Kong recorded a growth of
6.3 percent in gross domestic product in 2007, the fourth
consecutive year with a growth of over 6 percent.
Tsang said adhering to the
principles of commitment to society, sustainability and pragmatism,
is in line with the idea of “big market, small government.”
Explaining the budget at a press
conference, Tsang said he was aiming for a budget that combines
“consolidation and progress,” “respect for tradition while
making timely improvements,” and “caring for the present while
developing for the future.”
“At the moment, Hong Kong is
benefiting from strong economic performance. But our experiences
over the past decade have shown that there are many variables that
can turn this equation on its head, and quite quickly, too. While I
remain cautiously optimistic, we also need to be vigilant,” he
said.
Hong Kong suffered economic
difficulties as the Asian financial crisis hit the financial hub
after its return to the Chinese motherland in 1997, followed by SARS
outbreak in 2003, leading to low economic growth and high
unemployment.
Tsang said he was “cautiously
optimistic” about Hong Kong’s economic prospect, forecasting a
growth of four to five percent while citing unfavorable factors such
as a slowdown in U.S. economy, inflation pressure and mainland’s
tightening policies.
Tsang also earmarked a one-off 18
billion HK dollars ($2.31 billion) for the establishment of a
research endowment fund, in addition to 50 billion HK dollars ($6.41
billion) from the fiscal reserves for health care reforms.
Tsang also brought up a series of
tax rebates and extra allowances, saying that major allowances and
tax rates will be reverted to the 2002-2003 levels upon the
implementation of the relief programs.
But he did not grant calls for a
substantive increase in the monthly allowances for the elderly to
1,000 HK dollars from around 700 HK dollars and, instead, he
proposed a one-off extra allowance of 3000 HK dollars for each of
the elderly.
In his budget speech, Tsang
elaborated on the challenges posed by an aging population, saying
that about 27 percent of Hong Kong’ s population would be 65 years
or above by 2033, leading to immense pressure on public finances.
“An aging population will
impose limitations on the production capacity of the economy. We
must attract talented people from the mainland and overseas to give
fresh impetus to our economy and improve our population
structure,” he said.
If the old age allowance were
increased to 1,000 HK dollar for each eligible person, the
expenditure on the allowance would surge to 14 billion HK dollars by
2033.
“In the long run, this measure
would be unsustainable, and the expenditure involved would become a
heavy burden on the community, “ he said.
Raymond Or, vice chairman and
chief executive officer of Hang Seng Bank, said the budget was
balanced and pragmatic and he was pleased with the corporate tax cut
and the forecast for the growth of Hong Kong economy in 2008 to be
four to five percent.
The one-off relief measures could
help relieve inflation pressure, he added.
Leung Chun-ying, convenor of the
non-official members of the Executive Council, said the budget was
comprehensive.
“We expect all members of the
society will support this budget, “ he said.
Hong Kong’s Chief Executive
Donald Tsang on Wednesday also praised the budget for helping
underprivileged groups, returning wealth to the people and laying
the foundations for Hong Kong’s long-term development.
“These undertakings all honor
the pledges in my election manifesto to leave wealth with the
people,” he said. (7.8 HK dollars = US$1).
--Xinhua
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