Highlights of The Budget 2017-18

Today, on 22nd February, the Finance Secretary of the HKSAR, Mr Paul Chan Mo-po, delivered The Budget for the year 2017-18.

On economic performance, there was a modest growth of 1.9% in 2016 as a whole, and the GDP growth was expected to be 2% to 3% in 2017.

The unemployment rate averaged 3.4% in 2016, sustaining a state of full employment in general. Inflation pressure was moderate. The headline inflation for 2016 was 2.4%, while the underlying inflation was 2.3%. For 2017, headline inflation of 1.8% and underlying inflation of 2% is predicted.

It was forecast there was a surplus of $92.8 billion for 2016-17. Fiscal reserves are expected to reach $935.7 billion by March 31, 2017.

Here are major points in the Budget for your information:

Tax
- Reduce salaries tax and tax under personal assessment for 2016-17 by 75%, subject to a ceiling of $20,000
- Reduce profits tax for 2016-17 by 75%, subject to a ceiling of $20,000
- Widen the marginal bands for salaries tax from the current $40,000 to $45,000

Relieving Life Burden
- Waive rates for four quarters of 2017-18, subject to a ceiling of $1,000 per quarter for each rateable property
- Extend the entitlement period for the tax reduction for home loan interest from 15 years of assessment to 20 while maintaining the current deduction ceiling of $100,000 a year
- Raise the deduction ceiling for self-education expenses from the current $80,000 to $100,000

Support for SMEs
- Extend the application period for the Dedicated Fund on Branding, Upgrading and Domestic Sales for five years to June 2022 to assist Hong Kong enterprises in furthering their business development in the Mainland
- Extend the application period for the special concessionary measures under the SME Financing Guarantee Scheme to 28 February 2018 to help enterprises tide over their liquidity needs - Raise the cap on the contingent liability of ECIC under contracts of insurance from $40 billion to $55 billion

Innovation and Technology
- Reserve $10 billion for supporting I&T development in Hong Kong
- Set up a new committee on I&T development and re-industrialisation to co-ordinate the I&T development and re-industrialisation of Hong Kong
-Set up a $2 billion Innovation and Technology Venture Fund (ITVF), co-investing in local I&T start-ups with venture capital funds on a matching basis of about one to two
- Launch a $500 million Innovation and Technology Fund for Better Living to finance I&T projects that improve people's daily lives and benefit the elderly or the underprivileged
- Invite Cyberport to study the latest technology and products development and explore further promotion of e-sports in Hong Kong
- HKMA is developing a new Faster Payment System (FPS) which is completed next year

Trade and Business Development
- Continue to negotiate IPPAs with Iran and Russia.
- Establish a Trade Single Window which provides a one-stop electronic platform for the lodging of trade documents and expedite trade declaration and customs clearance with a view to facilitating trade
- Plan to introduce a bill into the Legislative Council (LegCo) in 2017 to amend the Inland Revenue Ordinance to offer tax concession
- Commence preliminary work to establish Economic and Trade Office (ETO) in India, Mexico, Russia, South Africa and the United Arab Emirates
- Set up 4 liaison units in Tianjin, Zhejiang, Guangxi and Shaanxi in the first half of 2017

Finance
- Issue a second batch of Silver Bond in 2017-18
- Extend the profits tax exemption to onshore privately-offered open-ended fund companies
- Explore the development of eMPF, a centralised electronic platform to enhance the administrative efficiency, which will provide room for fee reduction
- Expand the network of Comprehensive Avoidance of Double Taxation Agreements (CDTAs) with other jurisdictions

Tourism
- Waive the licence fees for 1 800 travel agents, over 2 000 hotels and guesthouses for 1 year
- Waive the licence fees for restaurants and hawkers and fees for restricted food permits for 1 year
- Allocate an additional sum of $243 million to enhance HK’s tourism appeal - supporting light shows, home-grown mega events; launching a greater variety of tourism products; providing promotional offers; strengthening promotion in overseas markets and providing funding support for the training of members of the tourism industry

Land Supply
- Sell 28 residential sites, including 20 new sites, capable of providing about 19 000 residential units
- Sell 3 commercial/business sites and one hotel site, capable of providing about 172 000 square metres of floor area and some 550 hotel rooms respectively
- Make a number of large commercial sites available to the market: the Queensway Plaza site, the site on top of the terminus of the Guangzhou-Shenzhen-Hong Kong Express Rail Link (Hong Kong Section), Site 3 of the new Central Harbourfront, the Caroline Hill Road site, the Sai Yee Street site and various sites in Kai Tak

Creative Industries and Arts
- Sponsor design exhibitions to be staged in Hong Kong, five Mainland and three overseas cities to present and promote our design industry
- Organise thematic Hong Kong film shows in ten cities in North America, Europe and Asia to highlight the achievements of Hong Kong's film industry
- Sponsor exhibitions to be staged locally and in Europe on the works of Hong Kong comic artists
- Allocate additional resources to support more local art groups and artists to perform in major overseas and Mainland cities

Sports Development
- Earmark a total of $20 billion for sports development
- Launch 26 projects in the coming 5 years to develop new or improve existing sports and recreation facilities in different districts
- Seek funding approval of about $31.9 billion for the construction of the Kai Tak Sports Park, which mainly provides a 50 000-seat main stadium, a public sports ground and a large indoor sports centre

Education
- Implement the free quality kindergarten education policy from the 2017/18 school year to replace the Pre-primary Education Voucher Scheme
- Regularise the Study Subsidy Scheme for Designated Professions/Sectors from the 2018/19 academic year to subsidise students to undertake designated self-financing undergraduate programmes
- Inject an additional $1.5 billion into the Continuing Education Fund (CEF) and explore various measures for its enhancement
- Inject $200 million into the Multi-faceted Excellence Scholarship to support local students who excel in areas other than academic performance
- Allocate an additional $100 million to expand the International Youth Exchange Programme which helps to increase their global exposure and broaden their international horizons
- Launch the 7th round of Matching Grant Scheme in 2017-18 with a commitment of up to $500 million for eligible self-financing local degree-awarding institutions to apply
- Increase the allocation for regular school repairs by 9% to $1.2 billion

For enquiry, please contact:
Chloe Deng
Public Affairs and Policy Manager
The Australian Chamber of Commerce – Hong Kong and Macau
301 -2 , 3/F Lucky Building,
39 Wellington Street, Central,
Hong Kong
Tel: +852 2522 5054
Dir: +852 2115 3305
Fax: +852 2877 0860
www.austcham.com.hk

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