Budget surplus set to top $55b

PUBLISHED : Saturday, 07 February, 1998, 12:00am
UPDATED : Saturday, 07 February, 1998, 12:00am

The Government surplus for this financial year could top $55 billion, much higher than the $31.7 billion official estimate.

The windfall is largely due to the active property and shares markets boosting land revenue and stamp duty.

The value of property transactions for 1997-98 will reach $730 billion, generating about $17.85 billion in stamp duty.

Stamp duty raised on share trades had reached $9.57 billion by the end of December and is likely to exceed $10 billion by the end of the present financial year.

Total duty from the two will be $15.09 billion more than the official estimate.

According to figures for the first half of 1997-98, revenue from 'public auction, private treaty grants and modification of existing leases, exchanges and extensions' is $17.73 billion higher than expected.

This adds up to $27.07 billion including land revenue earned in three recent public auctions. Land revenue in the first quarter has to be shared with the SAR Land Fund and the new amount is $20.21 billion higher.

Other items affecting the surplus include Tung Chee-hwa's introduction of the quality education fund which increased expenditure by $5 billion.

But funds set aside for land resumption and the loan fund was underspent by about $3.1 and $4.2 billion respectively. The combined effect is a surplus over $55 billion.

Billions of dollars will also be generated from future land auctions, land rents since the handover and the usual practice of underspending on capital works, further pushing the surplus towards $60 billion.

Despite such a huge surplus, Professor Liu Pak-wai, a member of the Commission for Strategic Development chaired by Tung Chee-hwa, warned the Government should not adopt a deficit budget.

Professor Liu said it could be interpreted as a change in SAR fiscal policy and lead to speculation against the Hong Kong dollar.

He suggested the Government give people a one-off tax refund, while maintaining a surplus for the current financial year.

Ousted Democratic legislator, Lee Wing-tat, called for some tax concessions while maintaining a surplus budget for next year.