Financial Secretary Henry Tang says the tax concessions proposed in his 2007-08 Budget adhere to the principle of prudent fiscal management

A HK$20 billion (US$2.57 billion) package of tax concessions designed to support Hong Kong's current robust economic development and further bolster the city's already buoyant investment climate have been introduced in the 2007-08 Budget.

Financial Secretary Henry Tang used a windfall budget surplus of HK$55.1 billion (US$7 billion) – a figure that is beyond all market expectations and 10 times the Government's original estimate – to hand out tax rebates and rate waivers which he said was a way "to share the wealth".

The Government's fiscal position had markedly improved due to the strong economic recovery. GDP leapt by 6.8 per cent in 2006 and the Hong Kong economy has continuously enjoyed an above-trend growth of 7.6 per cent over the past three years. Total retail sales for 2006 were up by 23 per cent compared to three years ago, while overall investment has been on the rise for four years, growing to 8 per cent last year - the biggest rise since 2000. In 2007, GDP growth is forecast at 4.5-5.5 per cent.

Clear message

The Hong Kong Trade Development Council (HKTDC) said the budget sent "a clear and assuring message to the local and international business sectors that Hong Kong, as the world's freest economy, will continue to maintain a market-led economy, a strict fiscal discipline and a low and simple tax regime".
 
Key initiatives to further enhance investment and trade include:

* reducing Hong Kong's already low salaries tax from 19 per cent to a 17 per cent maximum and maintaining profits tax at its competitive 17.5 maximum rate.

* reducing by half the duty rates on wine (80 per cent to 40 per cent), beer and other drinks containing not more than 30 per cent alcohol (40 per cent to 20 per cent)

* HK$300 million (US$38.5 million) to establish a new fund for film production and development

* $3.1 billion (US$394.4 million) to upgrade air traffic control facilities and build a new Civil Aviation Department headquarters at Hong Kong International Airport

* build a knowledge base economy with a $210 million (US$26.9 million) allocation to install free internet WiFi networks – as wireless internet is more commonly known - in government facilities, libraries, parks and recreation centres

* invite tenders for a new cruise terminal at Kai Tak (Hong Kong's old airport)

* $29 billion (US$3.7 billion) for infrastructure projects over the next few years

"These new initiatives will not only help facilitate the long-term growth of the city's economy, but will also reinforce our competitive edge in the sectors of financial services, trade and logistics to add value to business between China and the rest of the world," HKTDC added.

For more www.budget.gov.hk