Budget Speech

Revised Estimates for 2010-11

53.      When I prepared the 2010-11 Budget early last year, both the economic situation and the external environment were not completely stable. Based on a 2.7 per cent economic contraction for 2009 as a whole and the prevailing economic trends, I estimated a four to five per cent GDP growth for 2010. With the implementation of our stimulus measures, the economic recovery has become more entrenched. This, coupled with the better-than-expected rebound of the global economy, particularly that of the Mainland, has enabled Hong Kong to achieve a GDP growth of 6.8 per cent in 2010, which is higher than the original estimate.

54.      Income levels rose in parallel, leading to an increase in the revenues from profits tax and salaries tax, for which the revised estimate reaches $140.5 billion, higher than the original estimate by $22.2 billion. The stock and the property markets were buoyant, bringing in much higher than expected revenues from stamp duty. The revised estimate for revenues from stamp duty reaches $51 billion, $21 billion higher than the original estimate.

55.      In 2010-11, developers were active in triggering the sale of sites, bidding for land and applying for change of land use. The Government also put sites on the market in a bid to meet development needs. We estimate that the land revenue for the year will reach $62 billion, $27.9 billion higher than the original estimate.

56.      Far higher-than-expected land revenue and revenue from stamp duties, together with increases in other tax revenue, have resulted in significantly higher total revenue compared to the original estimate for 2010-11. The revised estimates for operating revenue and capital revenue are $301.5 billion and $73.3 billion respectively. The revised estimate for total revenue is $374.8 billion, $82.8 billion higher than the original estimate. Government expenditure for 2010-11 is
$303.5 billion, $13.7 billion less than the original estimate, with operating expenditure accounting for $240.8 billion. For 2010-11, I forecast an operating surplus of
$60.7 billion and a capital financing surplus of $10.6 billion. For the Consolidated Account, I forecast a surplus of $71.3 billion, equivalent to 4.1 per cent of our GDP. By 31 March 2011, our fiscal reserves are expected to have increased to $591.6 billion, equivalent to 23 months of government expenditure or 34 per cent of our GDP.

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