Returning Wealth to the People
70. When standing for the Chief Executive election, I have pledged that in this term, I would provide tax relief, which includes gradually lowering salaries tax and profits tax rates to 15%, if fiscal conditions allow. The consolidated surplus for 2006-07 is about $3.5 billion higher than the revised estimate in the 2007-08 Budget. To date, public revenue figures for 2007-08 are better than expected in some areas. I have therefore decided to introduce the following relief measures:
(1) Tax Reduction: With the consent of the Financial Secretary, I am pleased to announce that the standard rate of salaries tax will be reduced to 15% in 2008-09. Given the significance of profits tax on the Government's revenue, I intend to adopt a prudent approach by initially offering a one percentage point cut to 16.5% in 2008-09. These two measures will cost the Government about $5 billion annually. We will consider further profits tax relief if our economy remains robust and our public finances stay sound.
(2) Rates Relief: The Financial Secretary has announced waiving rates for the first two quarters of the 2007-08 financial year. I am pleased to announce that rates for the last quarter will also be waived, subject to a ceiling of $5,000 for each rateable tenement. This will cost the Government $2.6 billion.