Modest relief measures, such as rates waivers for two quarters and tax rebates of HK$5,000-plus, are expected to be announced in Wednesday's budget as the government opts to save cash for stormy times ahead.
A source familiar with the drafting of the budget said the administration was preparing for the worst-case scenario of a bad economy this year and next and expected to have a deficit for the next three years.
'Nobody can say whether the economy will recover next year and if we have to prepare for the worst,' the source said. 'That's why the government prefers keeping as much ammunition in its war chest as it can to cope with growing volatility in the next two years.'
The source said the government might grant fresh sweeteners to the needy after the summer if the economy continued to deteriorate.
Given the administration's forecast of a gloomy economic outlook, the biggest sweetener to be announced by Financial Secretary John Tsang Chun-wah on Wednesday would be tax rebates of between HK$5,000 and HK$10,000, the source said. Mr Tsang was also expected to waive rates for property owners for two quarters, according to the source.
The amount of relief for taxpayers is expected to be substantially less than that handed out in last year's giveaway budget.
In his maiden budget in February last year, Mr Tsang announced a rebate of 75 per cent of the tax payable for the 2007-08 financial year, capped at HK$25,000, and granted rates waivers for four quarters.
