2008/2009 Hong Kong Budget Highlights 

• 6.3% increase in real GDP in 2007/2008.  A 4% to 5% increase in GDP in real terms is forecast for 2008/2009.  Medium term annual growth forecast over the period 2009 to 2012 is estimated to be 4.5% in real terms.
   
• Inflation for 2007/2008 and 2008/2009 of 2% and 4.5%, respectively.
   
• A revised consolidated budget surplus of $115.6 billion is forecast for 2007/2008, as compared with the original $25.4 billion surplus forecasted this time last year for the same period.  The $115.6 billion is made up of a $63.7 billion surplus on the operating account and a $51.9 billion surplus on the capital account.
   
• A consolidated budget deficit of $7.5 billion is forecast for 2008/2009.  By 2012/2013, a consolidated surplus of $75 billion is forecast, comprising surplus of $67.3 billion and $7.7 billion on the operating and capital accounts, respectively.  At the end of 2012/2013, the Government is projecting it will have fiscal reserves of around $723 billion, approximately equivalent to 25 months of total Government expenditure.
   
• Operating expenditure for 2007/2008 is forecast to be $206.4 billion.  Going forward, while total public expenditure will be kept well below 20% of GDP, operating expenditure is projected to increase to $286.5 billion in 2012/2013.

Profits Tax        

• Reduction in profits tax rate by 1% to 16.5% and 15% for companies and unincorporated business respectively.
   
• Accelerated tax depreciation for environment friendly equipment and building installation.
   
• Increase the ceiling of tax deductible charitable donations from 25% to 35% (equally applied to salaries tax and tax under personal assessment).

Salaries Tax 

• No change in marginal tax rates.  Marginal tax bands are widen by $5,000 to $40,000.
   
• Reduction in standard tax rate by 1% to 15%.
   
• Restoring basic allowance, married person's allowance and single parent allowance back to the 2002/2003 level of $108,000, $216,000 and $108,000 respectively.

Government Duties and Charges

• Exempt alcohol duty on wine, beer and all other alcoholic beverages except spirits.
   
• Waiver of hotel accommodation tax.

One-off Measures

• Waiver of 75% of profits tax, property tax, salaries tax and tax under personal assessment for 2007/2008, subject to a ceiling of $25,000, deducted from the taxpayer's final tax payable for the year.
   
• Waiver of rates for 2008/2009, subject to a ceiling of $5,000 per quarter for each rateable tenement.
   
• One additional month's standard rate CSSA payments for CSSA recipients, and one additional month of allowance for recipients of Disability Allowance.
   
• One-off payment of $3,000 to each recipient of Old Age Allowance.
   
• One-off injection of $6,000 into the MPF accounts of those people earning not more than $10,000 per month.
   
• Waiver of business registration fee for 2008/2009.
   
• Providing a subsidy of $1,800 to each domestic electricity account.

Others      

• Various expenditure measures to promote the economy and employment, and measures to improve livelihood and support disadvantaged groups.
   
• Continued commitment to invest in infrastructure projects of $21.8 billion for 2008/2009, excluding the upfront endowment of $21.6 billion to the West Kowloon Cultural District Authority.
   
• Earmarking $50 billion from the fiscal reserves to promote healthcare reform.
   
• A reduction in the First Registration Tax for environment-friendly commercial vehicles.