The government recorded a surplus of HK$1.2 billion for the first five months of the financial year, thanks to the booming property market. Official accounts released yesterday showed that government revenue for April to August amounted to HK$95.8 billion, exceeding the HK$94.6 billion in expenditures. The surplus compares with a HK$21.1 billion deficit for the same period last year. A government spokesman said the major source of income was land premiums, which totalled HK$38.1 billion in the five months. The sum came mainly from land sales by public auction. At August 31, total fiscal reserves stood at HK$370.5 billion, compared with HK$289.6 billion a year earlier. Li Kui-wai, associate professor of City University's economics and finance department, said the HK$1.2 billion surplus fell within expectations, given large receipts from land sales in recent months and stamp duty collected from the robust stock market. Factoring in tax revenue for the second half of the financial year, Professor Li said the total annual surplus could be higher than that of 2006-07, which the government estimated was HK$55.1 billion. He urged the government to consider cutting salaries and profits tax rates by about half a percentage point each to boost the city's competitiveness in view of the strong economic growth. Legislator Sin Chung-kai, of the Democratic Party, said the government should use the surplus for social investment, especially on infrastructure development.