The 2004-05 Budget - Budget Speech

SUPPLEMENT

NOTES ON THE TEXT

Information on HLI Deduction

Year of assessment	1998/99	1999/00	2000/01	2001/02	2002/03¹
Maximum deduction	$100,000	$100,000	$100,000	$150,000²	$150,000²
Number of taxpayers with HLI deduction	250 000	300 000	350 000	350 000	340 000
Total deduction allowed	$11.9 billion	$13.7 billion	$15.9 billion	$13.8 billion	$10.3 billion
Average deduction per taxpayer	$48,000	$46,000	$46,000	$40,000	$30,000

Projected tax savings of taxpayers by income group after implementation of the proposed extension

(a) 2003/04 Year of Assessment

Annual Income	Number of taxpayers	Taxpayers with HLI deduction
Annual Income	Number of taxpayers	Number	Average tax savings	Average tax savings as a percentage of tax payable
$100,000 to $200,000	510 000	54 000	$1,100	(47%)
$200,001 to $300,000	346 000	92 000	$3,200	(36%)
$300,001 to $400,000	198 000	79 000	$4,700	(26%)
$400,001 to $600,000	155 000	81 000	$7,000	(18%)
$600,001 to $900,000	73 000	39 000	$8,800	(11%)
$900,001 and above	68 000	35 000	$9,900	(5%)
Total	1 350 000	380 000	$5,200	(13%)

(b) 2004/05 Year of Assessment

Annual Income	Number of taxpayers	Taxpayers with HLI deduction
Annual Income	Number of taxpayers	Number	Average tax savings	Average tax savings as a percentage of tax payable
$100,000 to $200,000	560 000	63 000	$1,400	(45%)
$200,001 to $300,000	346 000	102 000	$3,800	(35%)
$300,001 to $400,000	198 000	84 000	$5,400	(25%)
$400,001 to $600,000	155 000	89 000	$7,700	(18%)
$600,001 to $900,000	73 000	43 000	$9,400	(11%)
$900,001 and above	68 000	39 000	$10,100	(5%)
Total	1 400 000	420 000	$5,800	(14%)

¹	Figures updated up to February 2004.
²	In his 2001 Policy Address, the Chief Executive announced the increase of the maximum amount of deduction for the 2001/02 and 2002/03 years of assessment from $100,000 to $150,000 to ease the burden of home owners.

	*2004-05*
Property Type	Average Reduction in Rateable Value⁽⁶⁾	New Average Rates Payable	*Savings*

	%	$ per month	$ per month
Small Domestic Premises⁽¹⁾ (Private)	-11	206	26

Medium Domestic Premises⁽¹⁾ (Private)	-13	475	70

Large Domestic Premises⁽¹⁾ (Private)	-11	1,230	156

Public Domestic Premises⁽²⁾	-11	117	15

All Domestic Premises⁽³⁾	-11	220	27

Shops and Commercial Premises	-2	1,357	32

Offices	-13	927	139

Industrial Premises⁽⁴⁾	-10	503	53

All Non-domestic Premises⁽⁵⁾	-3	1,302	47

All Properties	-8	369	30

(1)	Domestic units are classified by relation to saleable areas as below:
	Small domestic	up to 69.9m?/font>	(up to 752 sq. ft.)
	Medium domestic	70m?to 99.9m?/font>	(753 sq. ft. - 1 075 sq. ft.)
	Large domestic	100m?and over	(1 076 sq. ft. and above)
(2)	Including Housing Authority and Housing Society rental units
(3)	Including car parking spaces
(4)	Including factories and storage premises
(5)	Including miscellaneous premises such as hotels, cinemas, petrol filling stations, schools and car parking spaces
(6)	The rateable values for 2004-05 reflect the changes in open market rental values between 1 October 2002 and 1 October 2003

	*2004-05*
Property Type	Average Reduction in Rateable Value⁽⁶⁾	New Average Rent Payable	*Savings*

	%	$ per month	$ per month
Small Domestic Premises⁽¹⁾ (Private)	-11	117	14

Medium Domestic Premises⁽¹⁾ (Private)	-12	261	35

Large Domestic Premises⁽¹⁾ (Private)	-10	567	65

Public Domestic Premises⁽²⁾	-11	70	8

All Domestic Premises⁽³⁾	-11	127	15

Shops and Commercial Premises	-2	767	16

Offices	-13	914	141

Industrial Premises⁽⁴⁾	-9	310	32

All Non-domestic Premises⁽⁵⁾	-3	725	22

All Properties	-7	206	16

(1)	Domestic units are classified by relation to saleable areas as below:
	Small domestic	up to 69.9m?/font>	(up to 752 sq. ft.)
	Medium domestic	70m?to 99.9m?/font>	(753 sq. ft. - 1 075 sq. ft.)
	Large domestic	100m?and over	(1 076 sq. ft. and above)
(2)	Including Housing Authority and Housing Society rental units
(3)	Including car parking spaces
(4)	Including factories and storage premises
(5)	Including miscellaneous premises such as hotels, cinemas, petrol filling stations, schools and car parking spaces
(6)	The rateable values for 2004-05 reflect the changes in open market rental values between 1 October 2002 and 1 October 2003

1.	Estimated rates of change in the Gross Domestic Product and its expenditure components and in the main price indicators in 2003 :

			(%)
	(i)	Growth rates in real terms of :

		Private consumption expenditure		*

		Government consumption expenditure		1.9

		Gross domestic fixed capital formation		-0.1

		of which :
		building and construction	-6.9
		machinery, equipment and computer software	6.1

		Total exports of goods^		14.2

		re-exports	16.3
		domestic exports	-7.3

		Imports of goods		13.1

		Exports of services		5.5

		Imports of services		-4.4

		Gross Domestic Product (GDP)		3.3

		Per capita GDP		3.1
		Per capita GDP at current market prices	HK$181,500
			(US$23,300)

	(ii)	Rates of change in :

		Composite Consumer Price Index		-2.6

		GDP Deflator		-5.1

		Government Consumption Expenditure Deflator		-2.8

	(iii)	Growth rate of nominal GDP		-2.0

	^	Including non-monetary gold, which is not covered in the regularly published merchandise trade statistics.
	*	Change of less than 0.05%.

2.	Annual growth rates in real terms of re-exports and domestic exports :

		Re-exports (%)	Domestic exports (%)

	2001	-2	-10
	2002	11	-11
	2003	16	-7

	Share in the value of total exports of goods in 2003	93	7

3.	Annual growth rates in real terms of retained imports :

		*Retained imports*

		*Total*	Foodstuffs and consumer goods	Raw materials and semi-manufactures	Capital goods
		(%)	(%)	(%)	(%)

	2001	-1	7	-15	8
	2002	2	5	10	-14
	2003	6	1	8	6

4.	Annual growth rates in real terms of exports and imports of services :

		*Exports of services* (%)	*Imports of services* (%)

	2001	6	2
	2002	12	*
	2003	5	-4

	* Change of less than 0.5%.

5.	Hong Kong's visible and invisible trade balance in 2003^{(Note 1)} :

		(HK$ billion)

	Total exports of goods	1,749.1

	Imports of goods	1,749.1

	*Visible trade balance*		-45.0

	Exports of services^{(Note 2)}	350.3

	Imports of services^{(Note 2)}	189.2

	*Invisible trade balance*^{(Note 2)}		161.1

	*Combined visible and invisible trade balance*^{(Note 2)}		116.1

	Note 1 Figures are reckoned on a GDP basis.
	Note 2 Preliminary figures.

6.	Annual averages of the unemployment and underemployment rates :

		*Unemployment rate* (%)	*Underemployment rate* (%)

	2001	5.1	2.5
	2002	7.3	3.0
	2003	7.9	3.5

7.	Annual rates of change in the Consumer Price Indices :

		Composite CPI	CPI(A)	CPI(B)	CPI(C)
		(%)	(%)	(%)	(%)

	2001	-1.6	-1.7	-1.6	-1.5
	2002	-3.0	-3.2	-3.1	-2.8
	2003	-2.6	-2.1	-2.7	-2.9

Forecast rates of change in the Gross Domestic Product and its expenditure components and in the main price indicators in 2004 :

		(%)
(i)	Growth rates in real terms of :

	Private consumption expenditure		6

	Government consumption expenditure		1.5

	Gross domestic fixed capital formation		7.1

	of which :
	building and construction	1.5
	machinery, equipment and computer software	11

	Total exports of goods^		7.7

	re-exports	8.5
	domestic exports	-2

	Imports of goods		9.1

	Exports of services		15

	Imports of services		9.5

	Gross Domestic Product (GDP)		6

	Per capita GDP		4.7
	Per capita GDP at current market prices	HK$184,500
		(US$23,700)

(ii)	Rates of change in :

	Composite Consumer Price Index		-1

	GDP Deflator		-3

	Government Consumption Expenditure Deflator		-2.5

(iii)	Growth rate of nominal GDP		2.8

^	Including non-monetary gold, which is not covered in the regularly published merchandise trade statistics.

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2004\| Important notices	Last revision date : 10 March, 2004