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Easing Financial Pressure
34. Local consumption has been a key driver for Hong Kong's economic growth in recent years. Easing the burden of citizens will have a stimulus effect. Taking into account the current macro environment, Government's fiscal capacity and the need to boost the economy in the short term, I shall introduce three relief measures –
| (a) |
reduce salaries tax and tax under personal assessment for 2015-16 by 75 per cent, subject to a ceiling of $20,000. This proposal will benefit 1.96 million taxpayers and reduce government revenue by $17 billion; |
| (b) |
waive rates for four quarters of 2016-17, subject to a ceiling of $1,000 per quarter for each rateable property. This will benefit 3.17 million properties and reduce government revenue by $11 billion; and |
| (c) |
provide an extra allowance to social security recipients, equal to one month of the standard rate Comprehensive Social Security Assistance payments, Old Age Allowance, Old Age Living Allowance or Disability Allowance. This will involve an additional expenditure of $2.8 billion. |
35. As regards recurrent measures, I shall adjust two categories of allowances under salaries tax and personal assessment from 2016-17. First, the basic allowance and the single parent allowance will be raised from $120,000 to $132,000 and the married person's allowance from $240,000 to $264,000. These proposals will benefit 1.93 million taxpayers and reduce tax revenue by $2.9 billion a year.
36. Second, I shall increase the allowances for maintaining a dependent parent or grandparent. Benefiting 600 000 taxpayers and reducing tax revenue by $860 million a year, the adjustments include –
| (a) |
increasing the allowance for maintaining a dependent parent or grandparent aged 60 or above from $40,000 to $46,000. The same increase applies to the additional allowance for taxpayers residing with these parents or grandparents continuously throughout the year; |
| (b) |
increasing the allowance for maintaining a dependent parent or grandparent aged between 55 and 59 from $20,000 to $23,000. The same increase applies to the additional allowance for taxpayers residing with these parents or grandparents continuously throughout the year; and |
| (c) |
raising the deduction ceiling for elderly residential care expenses from $80,000 to $92,000 for taxpayers whose parents or grandparents are admitted to residential care homes. |
37. This set of tax and short-term relief measures will cost $38.8 billion in total. Together with other spending initiatives in the Budget, they will have a fiscal stimulus effect of boosting GDP for 2016 by 1.1 per cent.
38. I have to emphasise that relief measures are different from recurrent expenditure. Relief measures aim to help citizens cope with the current financial pressure and serve as a counter-cyclical measure to preserve economic stability and safeguard employment. These are subject to adjustments in light of the economic and financial position of the year. Recurrent expenditure is deployed for new policies, new services or enhancement of existing services.
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