2003/2004 Budget Highlights
Economic Indicators
- 2.3% increase in GDP in 2002/2003. A 3% increase in GDP is forecast for 2003/2004. Medium term growth forecast is also estimated to be 3%.
- A consolidated budget deficit of HK$70 billion forecasted for 2002/2003 as compared with a deficit of HK$45.2 billion announced this time last year for the same period.
- Deflation for 2002/2003 of 3%, with 1.5% forecasted deflation for 2003/2004.
- A consolidated budget surplus of HK$8.4 billion forecasted for 2007/2008. At the end of 2007/2008, the Government is projected to have fiscal reserves of around HK$202 billion, equivalent to 10 months of total Government expenditure.
Profits Tax
- Corporate Profits Tax rate increased to 17.5% in 2003/2004. Rate increased to 15.5% and 16% for unincorporated businesses in 2003/2004 and 2004/2005 respectively.
- Profits tax concessions for qualified debt instruments to be enhanced. Offshore funds to be exempted from profits tax.
Salaries Tax
- Restore the marginal Salaries Tax bands and marginal tax rates to 1997/1998 levels, namely bands of HK$30,000 and rates of 2%, 8%, 14% and 20%. The standard rate is to be increased to 16%.
- Restore the basic and married person's allowances to 1997/1998 levels, namely HK$100,000 and HK$200,000 respectively.
- The above measures will be phased in equally over two years.
- Increase allowance for third to ninth child to HK$30,000.
- Tax exemption for holiday warrant and passage to be removed.
Government Duties and Charges
- No increases in tobacco duties, duties on alcoholic liquor, fuel duties or hotel accommodation tax.
- No changes to Stamp Duty or Estate Duty rates or bands.
- No changes in Rates.
- Changes to Government fees and charges to be announced at a later date after consultation with the Policy Bureaux.
- Duty concession for ultra low sulphur diesel to be extended for another year.
Others
- Air Passenger Departure Tax to be increased from HK$80 to HK$120. Boundary Facilities Improvement Tax for departures by land to be introduced, but timetable not defined.
- Exemption from Motor Vehicle First Registration Tax for accessories and distributor's warranties to be abolished. Tax bands and widths to be adjusted, and a marginal rate tax system to be introduced.
- Property Tax increased by 1% point to 16% over two years.
- Tax deductible limit for charitable donations increased from 10% to 25% of assessable profits or income.
- Betting Duty increased from 19% to 20%.
- Football Betting Tax to be introduced at a rate of 50% of gross profits.
- Acceptance that a Goods and Service Tax to broaden the tax base and secure a stable source of public revenue is necessary in the long term.
- HK$112 billion to be raised from sale or securitisation of Government assets.
- Restoration of civil service salaries to 1997 levels in cash terms in two phases over two years. Reduce civil service numbers by 10% by 2006/2007, launch second round of Voluntary Retirement scheme, and freeze recruitment.
- Reduction in social security payments by 10%.
On 5 March 2003, Financial Secretary, Mr Antony Leung, delivered his second budget speech. Unlike his maiden speech, his second speech was full of measures which he hopes will address Hong Kong's structural deficit problem.
