The government is almost certain to post a budget surplus without the help of discretionary land sales and other one-off income sources this fiscal year, the first time it has done so since 1997.
PricewaterhouseCoopers' rosy forecast points to an operating account surplus of $15.5 billion in 2005-06, the exact opposite of the government's projected shortfall of the same amount. The last time the operating account was in the black was in 1997-98, when there was a surplus of $43.8 billion.
The operating account only looks at regular income like tax revenue and excludes earnings from investments, issuing debt, selling off land and other sources. Counting these revenues as well, the consolidated surplus could total some $12.7 billion or more compared to the government's estimated deficit of $10.5 billion.
Financial Secretary Henry Tang Ying-yen will deliver his budget speech on February 22. The government is not predicting surpluses in either the consolidated or operating accounts until 2008-09.
'This is a big turnaround in fortunes and we could see further increases in the surplus,' PricewaterhouseCoopers tax partner Tim Lui Tim-leung said. 'However, the challenge for Mr Tang is whether this is sustainable.'
The biggest earners are profits and salaries taxes, which are expected to come in at almost $20 billion above the government forecast of $170.1 billion, Mr Lui said.
