The Budget of 2018-2019 saw a record high surplus of HK$1.38 billion and proposed to allocate around 50 billion each for measures to support the innovative industries and alleviate citizens’ financial burden, as the Budget aims to be forward-looking and targeted.
As ironic as it may seem, while Hong Kongers suffer through the world’s least affordable property market and one of the highest income inequality, the government is sitting on the largest ever reserve thanks to the robust stock and property markets that generated massive revenue from profits tax, stamp duty and land sales.
“40 percent of the surplus will be shared with the community while the remaining used for improving services and investing in the future,” said financial chief Paul Chan Mo-Po in a speech delivered to the LegCo members on Wednesday morning.
Chan said Hong Kong’s economy is expected to grow by 3 to 4 percent this year in his upbeat speech, while giving notable mentions of “innovation and technology”.
A significant portion of the surplus – nearly one-third – will go into bolstering innovation and technology as Hong Kong is in full swing to go smart. An additional HK$50 billion will be set aside for I&T development, going to the Hong Kong-Shenzhen Innovation and Technology Park in the Lok Ma Chau Loop, the Innovation and Technology Fund (ITF), the establishment of two research clusters on healthcare technologies and on artificial intelligence and robotics technologies, and the Science Park.
The notion of “innovation and technology” continued to ring when it comes to the construction industry, as Chan proposed to set up a $1 billion Construction Innovation and Technology Fund to support the industry to harness innovative technology.
Healthcare is another focus of the Budget as this sector will see a 13.3 percent increase on annual spending. The government will grant the Hospital Authority an additional recurrent funding of nearly HK$6 billion, strengthen the training for healthcare personnel and raise the accumulation limit of Elderly Health Care Vouchers to HK$5,000. The city’s medical system has been under great pressure due to the aging and growing population.
Ahead of the Budget, many called for a one-off cash handout as a short-term relief for the citizens to get an instant share of the windfall. The neighbouring city Macau is giving its citizens each HK$9,000 this year. But Chan did not deliver such a promise with the Budget.
Earlier he stressed that the government was in favour of more targeted measures for specific groups. This position was demonstrated by proposed measures such as the one-off grant of $2000 cash to estimated 220,000 underprivileged students and the extra allowance, equal to two months of the standard rate, to social security recipients.
Taxpayers will also enjoy a reduction in salaries tax and profits tax by 75 percent, subject to a ceiling of HK$30,000 and HK$20,000 respectively, and a waiver of rates for four quarters, subject to a ceiling of HK$2,500 per quarter for each rateable property.
As much as the new Budget is welcomed by Carrie Lam’s administration as she said in her statement that the Budget embraced her new fiscal philosophy, public opinion on the Budget was mixed.
Daniel Wong, a manager from the banking sector, told Harbour Times that he welcomed the tax rebates, calling them “reasonable and benefit the general public.”
Boris Yu, a secretary from The Hong Kong Federation of Trade Unions, told Harbour Times that the federation criticized that the low-income households who do not live in public housing or receive social security cannot share the fruit of the economic success, as they cannot enjoy the tax rebate or the extra allowance. A cash handout would be a more direct help for those.
The Budget is the very first from chief executive Carrie Lam’s administration and the second by Chan as financial head.
It carries three objectives – to deliver a diversified economy, invest in the future and build a caring and sharing community, said Chan.
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