2011/2012 Hong Kong Budget Highlights

2011/2012 Hong Kong Budget Highlights 

Mr. John Tsang, the Financial Secretary of Hong Kong, announced 2011/12 Budget on 23 February 2011. The following is the Budget highlights:

1. Taxation Waive

- Waive rates for 2011-12, capped at $1,500 per tenement per quarter.

- Raise child allowance by 20%.

- Increase dependent parent/ grandparent allowances and deduction ceiling for elderly residential care expenses by 20%.

2. Stabilize the Property Market

- Allocate about $300 million to explore the feasibility of reclamation on an appropriate scale outside Victoria Harbour and rock cavern development to increase the supply of land.

- Various measures to stabilise the property market including provision of a total of 52 residential sites for sale in 2011/12.

3. Social Welfare

- Extend the Elderly Health Care Voucher Pilot Scheme for three years and double the value of health care vouchers to $500 per person per year.

- Raise the rates of Community Living Supplement under CSSA payable to severely disabled recipients.

- Provide an additional 1 300 subsidised residential care places and 1 700 community care services places for the elderly.

- Increase the supplements to subsidised residential care homes for the elderly.

- Reserve an additional $100 million for making injection to the short-term food assistance services as and when needed.

4. Education

- Set up a Self-financing Post-secondary Education Fund with a total commitment of $2.5 billion.

- Inject $250 million into the HKSAR Government Scholarship Fund.

- Provision of about $300 million a year for relaxing the income ceiling for the full level of student financial assistance under the means test mechanism.

- Provision of about $140 million a year for adjusting the existing tiers of financial assistance for post-secondary students so that those who pass the means test will receive more assistance.

5. Invest in the future

- Continue to enhance the competitiveness of the four traditional pillar industries.

- Promote the development of the six industries where we enjoy clear advantages, wine trading and explore new opportunities in emerging markets to promote the diversification of our economy.

- Strengthen co-operation with Guangdong Province, Macao, Taiwan and other regions in various aspects to sharpen our competitive edge in the global market.

- Enhance business environment to attract enterprises from all over the world to set up business in Hong Kong.

- Support small and medium enterprises (SMEs) by increasing the total guarantee commitment under the SME Loan Guarantee Scheme substantially to $30 billion.

6. Others Measures

- One-off injection of $6,000 into each MPF account with no salary ceiling.

- To protect public health, tobacco duty will be increased by 50 cents per stick of cigarette. Duties on other tobacco products will be increased by the same rate.

- To contain the growth of private cars, the First Registration Tax for private cars will be increased by about 15%.

The above information was extracted from HKSAR 2011/12 Budget. For more information, please visit to website www.budget.gov.hk.

Comment

In light of the great surplus of government for the 2010/2011 financial year, Tsang heeded public opinion on returning wealth for Hong Kong people by proposing several one-off measures.  In this year's Budget, a very peculiar proposal to inject HK$6,000 into each existing MPF account instead of a tax rebate is introduced. This measure drew criticism from various sectors of the society.

Subsequently, the Financial Secretary announced to amend the Budget on 2 March 2011. He proposed to grant HK$6,000 cash allowance to all permanent residents aged 18 or above to replace the original MPF injection; while also proposed a tax rebate of 75 % of salaries tax and tax under personal assessment, subject to a ceiling of $6,000. However, these new measures, instead of putting forward a long-term plan to alleviate the impact of high inflation on the livelihood, did not stop the continuous criticism from the society. On March 6, more than 10,000 protesters staged a protest march on street to slam on the government's Budget proposals.

The Budget has so far received disapproving response from the public.  People are keeping closer watch on Tsang and shoving him to make more concessions in the budget revision in order to secure sufficient support in the Budget Vote on 13 April.

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