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Highlights:
(All denominations are in HK$)
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| Economic Indicators
- 6.8% increase in real GDP in 2006. A 4.5% to 5.5% increase in GDP in real terms is forecast for 2007. Medium term annual growth forecast over the period 2008 to 2011 is estimated to be 4.5% in real terms.
- Inflation for 2006 and 2007 of 2.0% and 1.5%, respectively.
- A revised consolidated budget surplus of $55.1 billion is forecast for 2006/2007, as compared with the original $5.6 billion surplus forecasted this time last year for the same period. The $55.1 billion is made up of a $38.6 billion surplus on the operating account and a $16.5 billion surplus on the capital account.
- A consolidated budget surplus of $25.4 billion is forecast for 2007/2008, as compared with a surplus of $10.3 billion for the same period in last year's Medium Range Forecast (MRF). By 2011/2012, a consolidated surplus of $58.7 billion is forecast, comprising surpluses of $41.4 billion and $17.3 billion on the operating and capital accounts, respectively. At the end of 2011/2012, the Government is projecting it will have fiscal reserves of around $584.4 billion, equivalent to two years of total Government expenditure.
- Operating expenditure for 2006/2007 is forecast to be $195.7 billion. Going forward, while total public expenditure will be kept well below 20% of GDP, operating expenditure is projected to increase to $245.8 billion in 2011/2012.
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Profits Tax
- No change in profits tax rate. Rates remain at 17.5% for companies and 16% for unincorporated businesses.
Salaries Tax
- Marginal tax rates and tax bands restored back to 2002/2003 levels of 2%, 7%, 12% and 17%, with bands of $35,000 each.
- Basic and married person's allowances will remain $100,000 and $200,000 respectively in 2007/2008.
- Increases in child allowances by $10,000 to $50,000 per child, and an additional one-off child allowance of $50,000 for each child in the year of birth.
- To increase the maximum amount of deductions for self-education expenses by $20,000 to $60,000 per year.
Government Duties and Charges
- Reduction in alcohol duties on wine to 40% and on beer and other types of liquor containing not more than 30% of alcohol to 20%.
- Reduction in stamp duty on transactions of properties valued between $1 million and $2 million from 0.75% to a fixed amount of $100.
- No changes to tobacco duties, fuel duties, betting duties, hotel accommodation tax or stamp duty on Hong Kong stock.
One-off Measures
- Waiver of 50% of salaries tax and tax under personal assessment for 2006/2007, subject to a ceiling of $15,000, deducted from the taxpayer's final tax payable for the year.
- Waiver of rates for the first two quarters of 2007/2008, subject to a ceiling of $5,000 per quarter.
- One additional month's standard rate payments for CSSA recipients, and one additional month of allowance for recipients of Old Age Allowance and Disabilities Allowance.
Others
- To revise income share arrangements for the Exchange Fund.
- To align the duty-free quantities of tobacco and liquor that local residents and visitors are allowed to bring into Hong Kong at three packets and one litre respectively.
- Various expenditure measures to promote the economy and employment, and measures to improve people's livelihood.
- Continued commitment to earmark $29 billion a year on average for expenditure on infrastructure projects.
- Bill on Producer-Responsibility Scheme for plastic bags to be introduced into the Legislative Council within the year.
- Public consultation on reform of healthcare service delivery and related financing to be conducted in 2007, including review of the proposal to provide a tax deduction for premiums paid to private medical insurance schemes.
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