Sweeteners expected in budget

PUBLISHED : Monday, 16 February, 2009, 12:00am
UPDATED : Monday, 16 February, 2009, 12:00am
 

Financial Secretary John Tsang Chun-wah is likely to deliver sweeteners such as tax rebates and rate waivers in next week's budget, but the amount will be substantially less than he handed out in last year's giveaway budget.

A government source said Mr Tsang was actively considering the possibility of announcing tax rebates in the budget, but the rebate for each taxpayer was likely to be less than HK$10,000.

In his maiden budget in February last year, Mr Tsang offered a rebate of 75 per cent of the tax payable for the 2007-08 financial year, capped at HK$25,000.

The initiative, which benefited 1.4 million taxpayers, cost the government HK$12.4 billion.

'We have to take into account the impact on the government's fiscal position when we ponder the scale of tax rebates,' the source said.

'But it would not be anywhere near as big as those last year.'

The administration is under political pressure to announce cash handouts in view of a more positive financial outlook for the Treasury.

Another source close to the government said Mr Tsang was also likely to waive rates for property owners for one or two quarters.

'The period of rate waivers would be substantially less than what the finance chief offered in his last budget because of the administration's concern about possible deflationary effects,' the source said.

The financial secretary announced rate waivers for 12 months in the 2008-09 budget.

Mr Tsang will deliver his budget speech next Wednesday.

The government source said that instead of cash handouts the focus would be on initiatives to create jobs for needy people.

Mr Tsang is likely to announce the creation of more jobs on top of at least 12,500 internships and jobs announced by the administration after the third meeting of the Taskforce on Economic Challenges at the end of last month.

He is expected to spell out details of the government's plans to create the internships and temporary jobs, such as the amount of subsidies to be provided by the administration.

The government is considering providing subsidies for companies that hire as interns graduates who completed their university studies this summer.

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