Hong Kong budget hands out billions in tax cuts
HONG KONG: Hong Kong handed out billions of dollars in tax cuts and poverty relief yesterday to reflate its economy and projected a brighter outlook this year amid growing concerns over rising trade protectionism and higher interest rates.
The government bumped up its economic forecast for this year by a full percentage point to 2 to 3 per cent and said the economy grew at 1.9 per cent last year, faster than expected by economists.
The trade-reliant economy is carrying more momentum in the new year due to a pick-up in exports and private consumption as well as a more stable Chinese economy helping to boost annual growth to 3.1 per cent in the final quarter of last year - its fastest since the June quarter of 2015.
The strong growth data sent the local stock market to a fresh 18-month high.
Financial Secretary Paul Chan said in his budget speech that the property market was "out of tune with the local economy" despite a raft of cooling measures.
He said the government will "substantially" increase residential flat supply in the next few years.
Hong Kong's provisional budget surplus was a much higher than expected HK$92.8 billion (S$16.95 billion) for the 2016-17 financial year, far in excess of the HK$11 billion last year, with fiscal reserves of HK$935.7 billion.
The government said about HK$61 billion will be ploughed into elderly services, sports development, youth development and the high technology sector.
The package of one-off economic handouts and stimulus measures include reducing income tax and profits tax up to a ceiling of HK$20,000 per individual or firm, that would cost the government some HK$18.3 billion, as well as extra social welfare handouts for the elderly and disabled.
Total expenditure will increase to more than HK$490 billion in 2017-18 from HK$380 billion in 2012-13, Mr Chan said.- REUTERS