2012/13 Hong Kong Budget

Economic Indicators

• 5% increase in GDP in 2011.  A 1% to 3% increase in GDP in real terms is forecast for 2012.  Medium-term annual average growth rate over the period 2013 to 2016 is estimated to be 4% in real terms.
   
• The inflation rate for 2011 was 5.3%; and it is expected to be 3.5% in 2012.
   
• A revised consolidated budget surplus of $66.7 billion is forecast for 2011/12, as compared with the revised forecast of $8.5 billion deficit for the same period in April 2011.  The $66.7 billion is made up of a $38.2 billion surplus on the operating account and a $28.5 billion surplus on the capital account.
   
• A consolidated budget deficit of $3.4 billion is forecast for 2012/13.  By 2016/17, a consolidated surplus of $31.3 billion is forecast, comprising a surplus of $62.2 billion on the operating account and a deficit of $30.9 billion on the capital account.  At the end of 2016/17, the Government projects that it will have fiscal reserves of around $670.4 billion, approximately equivalent to 18 months of government expenditure.
   
• Operating expenditure for 2011/12 and 2012/13 are forecast to be $297.8 billion and $315 billion respectively.  The total public expenditure is 21.4% of GDP for 2012/13.  Going forward, while the total public expenditure will be kept at around 20% of GDP, operating expenditure is projected to increase broadly in line with the growth of the economy to $356.8 billion in 2016/17.
   

Profits Tax

• The profits tax rates for companies and unincorporated businesses remain unchanged at 16.5% and 15% respectively.

 

Salaries Tax

• No change in marginal tax rates and marginal tax bands.  No change in the standard tax rate.
   
• Increase the basic allowance and married person's allowance to $120,000 and $240,000 respectively.
   
• Increase the child allowance and additional one-off child allowance in the year of birth to $63,000 each.
   
• Increase the dependent parents/grandparents allowances to:
   
• $38,000 (for each parent/each grandparent aged 60 or above and not residing with a taxpayer) and $76,000 (for each parent/each grandparent aged 60 or above and residing with a taxpayer);
   
• $19,000 (for each parent/each grandparent aged 55 to 59 and not residing with a taxpayer) and $38,000 (for each parent/each grandparent aged 55 to 59 and residing with a taxpayer).

 
• Increase the dependent brother/sister allowance to $33,000.
   
• Increase the single parent allowance to $120,000.
   
• Increase the disabled dependent allowance to $66,000.
   
• Extend the entitlement period for the tax deduction for home loan interest from 10 years to 15 years.  The deduction ceiling of $100,000 per year remains unchanged.
   
• Increase the deduction ceiling for elderly residential care expenses to $76,000.
   
• Increase the maximum annual tax deduction for mandatory contributions to Mandatory Provident Fund schemes to $15,000.
   

Government Duties / Fees

• Abolish capital duty levied on local companies.
   
• Reduce the charges for import and export declarations by 50%.
   

One-off Measures

• Waive 75% of profits tax for 2011/12, subject to a ceiling of $12,000, to be deducted from the taxpayer's final tax payable for the year.
   
• Waive 75% of salaries tax and tax under personal assessment for 2011/12, subject to a ceiling of $12,000, to be deducted from the taxpayer's final tax payable for the year.
   
• Waive business registration fees for 2012/13.
   
• Waive rates for 2012/13, subject to a ceiling of $2,500 per quarter for each rateable property.
   
• Provide a $1,800 subsidy to each residential electricity account.
   
• Pay two months' rent for public housing tenants.
   
• Provide one additional month of Comprehensive Social Security Assistance (CSSA) payment, Old Age Allowance and Disability Allowance.
   

Others

• Set up a fund of $1 billion to help Hong Kong enterprises tap the Mainland market.
   
• Enhance the existing SME Financing Guarantee Scheme by increasing the maximum loan guarantee ratio to 80% for which the Government will provide a total guarantee commitment of $100 billion while the guarantee fee will be lowered.
   
• Increase the cash rebate under the R&D Cash Rebate Scheme, raise the funding ceiling for each project under the Small Entrepreneur Research Assistance Programme and increase the monthly allowance of the Internship Programme under the Innovation and Technology Fund.
   
• Provide housing land supply for some 30,000 private residential flats for 2012/13 and earmark various sites for the developments under the new Home Ownership Scheme and My Home Purchase Plan.  Total production of public rental housing flats will be 75,000 in the 5-year period starting from 2011/12.
   
• Increase the supply of business sites by introducing measures including "Energising Kowloon East", revitalising industrial buildings and relocating government departments from core business districts.
   
• Introduce measures to encourage the use of industrial buildings and industrial lots for data centres.
   
• Introduce various expenditure measures for education, including the allocation of $2.5 billion to launch the sixth Matching Grant Scheme, the injection of $1 billion into each of the HKSAR Government Scholarship Fund and Self-financing Post-secondary Education Fund, and the allocation of $5 billion to the Research Endowment Fund.
   
• Allocate $2.54 billion to the Hospital Authority to meet community demand for medical services and provide $2.2 billion for clinic and hospital projects, including the expansion and redevelopment of several hospitals.
   
• Launch a further issuance of "iBond" (i.e. inflation-linked retail bonds) worth not more than $10 billion.
   
• Continue to invest in infrastructure - the total value of infrastructure projects approved so far is worth $400 billion of which the annual actual expenditure on capital works for 2012/13 is $62.3 billion.  The proposal of building the third airport runway will be considered.