19.
Some Members have drawn attention to the $14.1 billion surplus for 1991- 92 and have gone on to argue that this should be used to cover further increases in recurrent spending. Let me remind Members that over half of this surplus can be looked on as an accounting illusion. It is simply the result of delayed expenditure on capital projects. The money will be drawn on in subsequent financial years as these projects get underway.
REVENUE
20.
In their speeches, Members have focused as much on the revenue measures as on the Appropriation Bill itself. Before addressing specific points, let me restate my approach in framing my revenue proposals.
I have carefully chosen tax concessions which provide relief for ordinary families.
I have taken account of the need to reduce our dependence on potentially volatile sources of revenue.
And I have been careful to avoid adding to inflationary pressures.
21. Some Members have criticised my proposals on the grounds that they have not contributed to redistributing the wealth of the community. I cannot accept this view. I think the needs of the disadvantaged are most effectively dealt with by carefully targeting our expenditure priorities.
22.
Members' anxieties have been most sharply focused on my salaries tax proposals. Let's examine the facts.
Personal incomes other than salaries are generally exempt from tax.
The standard rate of salaries tax has been progressively reduced since the mid 1980s from 17% to 15%. Hong Kong now enjoys one of the lowest rates in the world.
Over half of our working population now pay no salaries tax at all.
Of those who do pay salaries tax, over 90% pay at less than the standard rate.
In my Budget, I have proposed to increase salaries tax allowances by an average of over 12%.
This will result in 8% of salaries tax payers paying no tax at all; and a further 83% will have their tax bills reduced.
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