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HK Financial Secretary Delivers 2001/02 Budget
The total government spending of the Hong Kong Special Administrative Region (SAR) will amount to 254.7 billion HK dollars (US$32.65 billion) and the total revenue will be 251.7 billion HK dollars (US$32.27 billion) in the next fiscal year.
As a consequence, a small overall deficit of 3 billion HK dollars (384.6 million dollars) is expected, with the fiscal reserves falling slightly to 429.9 billion HK dollars (55.12 billion dollars) on March 31, 2002, said Donald Tsang, financial secretary of the Hong Kong SAR, Wednesday in Hong Kong.
Tsang, who will take over the post of the administrative secretary, delivered, as the financial secretary, his sixth and also his final budget to the Legislative Council Wednesday.
Entitled "Honing Our Strengths, Striving to Excel," the 2001/02 financial budget has been taken into account the state of the economy, people's livelihood, the future direction of Hong Kong's economic development and the government's financial position.
"The strong performance of the economy last year was hard- earned," Tsang said. "But the fact remains that, after much pain, the recovery has taken root. We must let those root grow stronger for the benefit of all."
He said Hong Kong is facing the Chinese mainland's "accession to the WTO, its continuing economic restructuring and a rapid slowdown in the U.S. economy." "Another year of consolidation makes good sense," he noted.
To take forward a suggestion made by the chief executive in his 2000 policy address, and to further encourage lifelong learning, Tsang proposed to increase the maximum amount of deduction for self-education expenses under salaries tax from 30,000 HK dollars (3,846 dollars) to 40,000 HK dollars (5,128 dollars).
To maintain Hong Kong's position as an international financial center and further increase competitiveness of Hong Kong's stock market, Tsang proposed to lower the stamp duty on stock transactions from 0.225 percent to 0.2 percent per round, following the 10 percent cut last year.
"To strengthen our services for the disabled, I have earmarked 219 million HK dollars (28 million dollars) in 2001/02 to implement a package of measures to address their basic needs, improve their employment prospects and help them realize their potential," he said.
Mentioning the youth at risk, Tsang said young people are the future pillars of the society and he earmarked 84 million HK dollars (10.8 million dollars) in the draft estimates, rising to about 180 million HK dollars (23.1 million dollars) a year by 2003/ 04, to launch a comprehensive program of support services for youth at risk.
"In recent years, we have provided a wide range of vocational training and retraining programs for those with low educational attainment," he said, and proposed to allocate an additional sum of 72 million HK dollars (9.2 million dollars) over the next two years for practical adult education of courses on language, IT and interpersonal skills.
"We believe these courses will improve the employment prospects of new arrivals, those who have been in Hong Kong for some time but are still seeking employment, and other Hong Kong residents who have never had the chance to receive formal education," he added.
To improve community facilities and promote community-building, the financial secretary has earmarked an additional 100 million HK dollars (12.8 million dollars) a year in the draft estimates to support this course.
Tsang pointed out that it is vital to ensure that the money the government is spending achieves the best possible results and this is all the more important when the government is containing the growth in government expenditure.
"Enhancing public sector productivity is our pledge to the community," he said. "We will keep up our effort."
He said the size of the civil service will continue to shrink with the number of posts by the end of 2002/03 well below 1994/95 level.
Enhanced Productivity Program will continue apace, delivering a five percent savings to fund new and improved services by 2002/03, he said, adding that management of government assets will improve and accrual accounting will begin in 2002/03.
Tsang noted enhancing productivity and controlling expenditure can only go so far towards achieving fiscal balance.
"When they alone cannot balance the books, we must critically consider the need to raise revenue," he said.
Tsang proposed tobacco duty increase by five percent and duty on alcoholic beverages, except wines and strong spirits, increase from 30 percent to 40 percent.
Other increases will include driving license fees and vehicle license fees for private cars, motor cycles and motor tricycles, on-street parking meters charges and air passenger departure tax, he added.
Tsang believes his proposal to increase these fees will have a negligible impact on living standards, given the small share these fees have in household expenditure and the modest level of the increase.
Some taxes, including profits tax, salaries tax, land and sea departure tax, betting duty and "green" tax, will remain unchanged, he said.
Tsang said, "Preparing this budget has been a challenge. We must have a clear vision of our future direction and continue to home our strengths in the economic interests of Hong Kong."
Outlining the strategy for development, Tsang said Hong Kong must capture opportunity from the mainland's accession to the WTO, step up cooperation with Guangdong, especially with the Pearl River Delta, to capitalize on regional competitive advantage.
Hong Kong must upgrade the human capital to meet demands of a knowledge-based economy and to help improve the standards of living of the disadvantaged, he said.
"As a community, we must pull together and focus on our next economic take-off. We must strive to excel as Asia's World City," he said. "I'm confident in the future of Hong Kong."
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