Financial Secretary John Tsang will be delivering his Budget Speech today. Bloomberg News

Balancing help for the needy with business recovery a key task

HONG KONG: Financial Secretary John Tsang will be delivering his Budget Speech today at the Legislative Council, against the backdrop of improving government finances - thanks to the economic recovery following the financial tsunami. There have been calls and expectations from various interest groups for him to be generous - ranging from the call for better care for the elderly to the business community's wish for a lower profits tax.

Despite these expectations of governmental largesse, Tsang is facing a tricky situation. The global economy is far from robust, with many people fearing a double-dip recession in the US, not to mention the recent crisis in Greece. The mainland's tightening of its policies for banks is also raising concerns about the country's growth.

Tsang will therefore have to be prudent, yet decisive in using the budget to help the specific sector of the needy while also attempting to help to improve the overall Hong Kong macro-economy on the other.

According to press reports, Tsang's budget is likely to reveal initiatives in at least several areas, including relief measures, health, land policy and efforts to prevent a property bubble.

With an estimated surplus of billions of dollars, the budget will launch a series of one-off relief measures. According to reports, the salaries tax could be reduced by 50 percent, limited to a maximum of HK$6,000 - HK$8,000. Property owners could be granted a reduction of the rates for two to three quarters. Public housing tenants would have a rent-free concession for one month. The Comprehensive Social Security Assistance and the Old Age Allowance recipients would be paid one extra month.

For young people, the budget is expected to provide about HK$100 per month Internet access allowance to low-income students.

The government would also put more monetary efforts to help owners of old buildings to carry out maintenance.

The government is also expected to allocate more resources to strengthen primary health care services. It is estimated that next year the additional funding allocated to the Hospital Authority will be not less than HK$900 million, of which about HK$160 million will be devoted to strengthening the long-term illness-related nursing service, including providing diabetes patients about a HK$1,600 monthly allowance annually so that they can choose to go to private clinics. About 1,000 people are expected to benefit form the scheme.

Land policy is also expected to be one of the hot topics in the budget. In response to widespread concern about the property market, the government is likely to increase the land supply, which it believes can help stabilize property prices. The government will also ask the MTR and the Urban Renewal Authority to speed up residential projects.

To address the housing needs of the medium- to low-income group, the government would request the Housing Authority to revitalize the second-hand, subsidized Home Ownership Scheme (HOS) market, to develop incentives to encourage home owners to sell, and to assist eligible people in buying second-hand HOS flats.

In view of the sky-rocketing property prices, especially for high-end flats, the budget will also propose an increase in the stamp duty for luxury real estate from the current 3.75 percent to a maximum of 4.5 percent for properties with a value of more than HK$20 million.

The Budget Speech will be released simultaneously on the government budget website (www.budget.gov.hk) at 11 am. After delivering his speech, Tsang will hold a press conference at 3 pm, while his forum with academics and television stations at 7 pm will be broadcast live.

Copies of the Budget Speech and a leaflet highlighting key proposals will be distributed at key public places and selected government offices later today.

(HK Edition 02/24/2010 page1)