Tax-cut call with surplus $10b up on forecast
Henry Tang denies budget underestimated revenue
Pressure mounted on the financial secretary to increase welfare benefits and tax rebates after the government yesterday announced a $14 billion surplus for the last financial year - nearly $10 billion more than estimated in the budget nearly two months ago.
Some lawmakers accused the government of deliberately under-reporting the surplus to deflect calls for tax concessions, but Financial Secretary Henry Tang Ying-yen, in an uncharacteristically prompt response, rejected such criticisms and refused to promise any tax cuts for next year.
According to the latest figures, expenditure for the financial year ended March 31 was $233.1 billion, and revenue $247.1 billion, resulting in a surplus of $14 billion. That compares with the $4.1 billion surplus forecast by Mr Tang in February's budget speech, although some officials and politicians at the time did forecast the surplus would be higher.
Yesterday, Mr Tang attributed the surplus partly to the property boom in the second half of the last financial year, which resulted in higher-than-expected revenue from stamp duty and land premium. Coupled with a bigger take from salaries tax and profits tax, revenue increased by $5.4 billion.
At the same time, government expenditure was $4.5 billion lower than forecast because of efforts to cut unnecessary spending, according to the government.
Pro-democracy unionist legislator Lee Cheuk-yan said: 'Obviously, the government tried to under-report the surplus. It is unacceptable. There is no point in the government keeping the money in a safe. It should boost spending to stimulate the economy so that all the people can have a share of our economic success.'
Mr Lee called for a tax rebate. Pro-Beijing legislator Cheng Yiu-tong also urged Mr Tang to cut salaries tax for the next financial year.
In a hastily called news briefing, Mr Tang dismissed the criticism that he had intentionally under-reported the surplus.
'Our forecast was made after assessments of our revenue and expenditure in the most objective and professional manner,' he said.
He did not say if he would rethink the controversial proposal to introduce a goods and services tax. It was too early to say whether he would consider cutting taxes next year, he added. 'We shall assess the situation and seek extensive consultation.'
Raymond So Wai-man, associate dean of the faculty of business at Chinese University, warned against any big increase in payouts or tax cuts. 'For an economy like Hong Kong, $14 billion is not a big amount. I would say it is the safe margin we need.'