Middle-income families see sunshine behind Macleod

THE Government has sent out so many promising signals that even the more aggressive political parties have not attempted to mount pre-Budget campaigns this year.

Many are convinced that the Financial Secretary, Mr Hamish Macleod, is poised to make substantial tax concessions in his second Budget speech on March 3.

In a briefing paper to legislators, Mr Macleod pledges to stand by last year's commitment to improve salaries tax allowances and the tax bands. He has made it clear that the Government will adhere to the following principles in formulating the budgetaryproposals: To generate enough income to cover expenditure and to maintain adequate reserves to deal with possible contingencies over the 1992-97 five-year planning period; Where affordable, to consider concessions to carefully targeted groups of taxpayers; Not to add unnecessarily to inflation while maintaining the real value of fees, charges and duties.

The paper also notes that: ''While these concessions will be significant in terms of the benefit to taxpayers, they must also be carefully focused and affordable.

''Suggestions, for example, that salary tax allowances should be increased by many times the present rate of inflation are most unlikely to be practicable.'' Although the guidelines are couched in prudent terms, many councillors are convinced that Hongkong's huge reserves would make it necessary for the Government to offer major tax-breaks for the lower and middle classes.

This year's surplus was projected at $4 billion in the 1992-93 Budget, but the administration has admitted it has been grossly underestimated.