HK budget surplus may come and go

Proposing to cut salary tax, the Hong Kong government is adhering to its professed economic principle of "big market, small government".

A "small" government characterizes itself by keeping money in the hands of the people. The Hong Kong government raised the salary tax rate in fiscal 2003 after several successive years of budgetary deficits during the economic slump. Now that the economy is on the boil and the government coffers are overflowing, people are naturally expecting a tax cut.

The economic recovery which began to take off in 2004 helped produce a government budgetary surplus in fiscal 2005. The government is widely expected to announce a fiscal 2006 surplus of HK$30 billion ($3.8 billion).