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HKETO: 2018-19 BUDGET HIGHLIGHTS
The Financial Secretary of the Hong Kong SAR Government, Mr Paul Chan, delivered his 2018-19 budget speech last Wednesday (February 28). As outlined, Hong Kong achieved a GDP growth of 3.8% in 2017 due to the better-than-expected outturn in the external environment, higher than the average trend growth rate of 2.9 per cent over the decade from 2007 to 2016. The economy is projected to grow by 3%-4% in 2018.
The latest unemployment rate dropped to a 20-year low of 2.9%. The headline inflation rate and underlying inflation rate for 2017 was 1.5% and 1.7% respectively. Forecast of these two inflation rates for 2018 is 2.2% and 2.5% respectively.
The Government will have an estimated surplus of $138 billion in 2017-18, of which about 40% will be shared with the community, and the remaining used for improving services and investing in future. For 2018-19, total government revenue is estimated to be $604.5 billion, while the overall expenditure is estimated at $557.9 billion, an increase of 17.6% compared with the revised estimate for 2017-18.
Fiscal reserves are expected to reach $1,092 billion by 31 March 2018 while the Housing Reserve will reach $78.8 billion.
Some highlights of the budget initiatives are listed below:
· Innovation and Technology
- Focus on four areas: biotechnology, artificial intelligence, smart city and financial technologies
- Set aside $20 billion for first phase of the Hong Kong-Shenzhen Innovation and Technology Park in the Lok Ma Chau Loop
· Financial Services Industry
- Pilot Bond Grant Scheme, green bond issuance programme, and Faster Payment System to be launched
· Trading and Logistics Industry
- Expand trade, investment and tax treaty networks to open up new markets
- Allocate $226 million for the Hong Kong Tourism Board to implement the Development Blueprint to broaden markets and attract visitors
· Business and Professional Services
- Inject $1.5 billon into the Dedicated Fund on Branding, Upgrading and Domestic Sales to boost SME’s competitiveness
- Provide $250 million to Hong Kong Trade Development Council to help local enterprises in seizing opportunities arising from the Belt and Road
Initiative and Bay Area.
· Construction Industry
- Set up a $1 billion Construction Innovation and Technology Fund to support the industry to harness innovative technology
· Creative Industries
- Inject $1 billion into the CreateSmart Initiative to support development of the creative industries
- Additional recurrent funding of nearly $6 billion to Hospital Authority
- $200 million to enhance healthcare professional training
- One-off additional $1,000 worth of elderly health care vouchers
- Extend the Colorectal Cancer Screening Programme to cover individuals aged 50 to 75
· Arts and Culture
- $20 billion for improvement and development of cultural facilities, $500 million for acquisition of museum collections and holding exhibitions
- Additional $500 million for the Art Development Matching Grants Pilot Scheme, about $370 million to support art groups and artists
- Inject $5 billion into the Elite Athletes Development Fund
- $1 billion for the sports portion of the Arts and Sport Development Fund for training and hosting competitions
· Allocate $2.5 billion for the Matching Grant Scheme to support the 10 publicly-funded post-secondary institutions
· Earmark $2.5 billion to set up a Student Activities Support Fund to support students in need to participate in life-wide learning activities
· $1 billion to support the work of the Youth Development Commission
Caring and Sharing
· Reduce profits tax, salaries tax and tax under personal assessment for Year of Assessment 2017-18 by 75%, subject to a ceiling of $30,000
· One-off grant of $2,000 for each student in need
· A two-month extra allowance to recipients of Comprehensive Social Security Assistance, Old Age Allowance, Old Age Living Allowance or Disability
· Waive rates for four quarters of 2018-19, subject to a ceiling of $2,500 per quarter
· Additional $660 million to improve rehabilitation services
· $500 million to provide social work services in all aided child care centres and kindergartens, and increase resources for primary schools to ultimately achieve the target of “one school social worker for each school”
Reducing Tax Burden on Individuals
· Increase basic and additional child allowance to $120,000
· Increase allowance for maintaining a dependent parent or grandparent aged 60 or above to $50,000
· Introduce personal disability allowance of $75,000
We hope you will find the information useful. Full details of the Budget can be found at: www.budget.gov.hk/2018/eng/index.html
(* All currency quoted above is Hong Kong dollar.)
Source: Hong Kong Economic and Trade Office