• Thu
  • Oct 2, 2014
  • Updated: 3:13pm
NewsHong Kong
FINANCE

Budget promises bounty, but relief measures likely smaller

Rates and rent waivers, and tax rebate, among measures likely to be announced by John Tsang

PUBLISHED : Monday, 18 February, 2013, 12:00am
UPDATED : Monday, 18 February, 2013, 8:24am

Relief measures worth billions of dollars, including the waiver of property rates and public housing rents, as well as a tax rebate, are expected to be unveiled by Financial Secretary John Tsang Chun-wah in the current administration's first - and his sixth - budget next Wednesday.

But the scale of the relief is likely to be smaller than last year, with Tsang's economic forecast for the next financial year relatively optimistic and people less likely to face hardship.

A government source said the finance chief had decided on his options for relief measures but was still finalising the details.

"The government is likely to opt for a basket of relief measures that have been implemented before as this will not stir any controversy," the source said.

The government is likely to opt for a basket of relief measures that have been implemented before as this will not stir any controversy

A year ago, with an estimated HK$67 billion fiscal surplus to hand, Tsang presented an HK$80 billion basket of measures.

That included a salaries tax rebate of up to HK$12,000, an increase in the basic allowance from HK$108,000 to HK$120,000, and a HK$1,800 electricity subsidy for 2.5 million households.

For those living in public housing, the government paid two months' rent, while all recipients of Comprehensive Social Security, Old Age and Disability allowance got an extra allowance, equal to one month's payment.

"Given the huge fiscal surplus expected ... it would be politically unrealistic not to introduce measures such as the waiver of public housing rents and property rates in the upcoming budget," the source said.

In his chief executive election platform early last year, Leung Chun-ying pledged to raise the ceiling for mortgage relief for homeowners from HK$100,000 to HK$150,000, and extend the entitlement to 20 years. The entitlement period was extended to 15 years in last year's budget.

But the source said the financial secretary was unlikely to further extend the entitlement period or raise the tax-deduction ceiling in the forthcoming budget.

"There is still some time to go before Leung's tenure expires [in 2017]. Besides, raising the ceiling would not make much difference in the light of current low interest rates," the source said.

Revelations last month that the government has already pocketed a surplus of HK$40 billion, for the nine months to December 31, prompted political parties to review their proposals to the government's new budget.

New People's Party, led by executive councillor Regina Ip Lau Suk-yee, proposed that the government should reduce 90 per cent of the salaries tax, subject to a ceiling of HK$15,000.

Federation of Trade Unions' lawmaker Chan Yuen-han said most residents of public housing estates should have their rent waived for one or two months.

In a report last month, Brian Fong Chi-hang, vice-chairman of think-tank SynergyNet said HK$180 billion worth of "sweeteners" were dished out from government coffers in the last six years, but there were also more protests over budget measures.

"HK$180 billion could be used for building 100,000 public homes … instead of wasting public resources on one-off measures, money could be better utilised," Fong wrote.

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