Carrie Lam steers clear of politics, pledges billions on technology sector and new housing schemes

• Plan to double gross domestic spending on research and development
• Profits tax for companies cut in half to 8.25 per cent for first HK$2 million
• 300 per cent tax deduction for the first HK$2 million companies spent on R&D
• New “Starter Homes” scheme to help young families own a home
• All residents will have a single digital identity as part of smart city blueprint
• Plan to expand convention centres leaves Wan Chai Sports Ground untouched
• Initiative to bring more youth into government

Hong Kong leader Carrie Lam Cheng Yuet-ngor has pledged to spend billions to catapult the city into the information technology age and “rekindle hopes” of more families becoming homeowners, in a maiden policy address that studiously downplayed contentious political issues.

Setting out her economic agenda, Lam announced moves to slash tax rates for businesses and fund billions more in tax deductions for research and development.

The profits tax rate would be halved to 8.25 per cent for the first HK$2 million of net gains – the much-anticipated tax break that was a campaign promise and one that would cost the government HK$5.8 billion in forfeited revenue a year.

The chief executive outlined her government’s goal to double the gross domestic spending on research and development from the current 0.73 per cent of the GDP to 1.5 per cent within her five-year term.

The 0.73 per cent ratio is equivalent to HK$18.18 billion based on last year’s GDP.

Lam also anticipated a brighter-than-expected economic outlook for Hong Kong, with overall growth this year expected above 3.5 per cent, on par with an earlier forecast between 3 and 4 per cent.

But to sustain this trend, “diversifying our economy is the only solution”, she said.