HONG KONG S economy has expanded by 6.8 percent in 2010 as it benefited from business ties with the mainland.
The figures were released as part of the annual budget address by Hong Kong s Financial Secretary John Tsang.
Analysts said Hong Kong had been benefiting from a growing number of affluent visitors from the mainland.
Many of them had been attracted by the weakness of the Hong Kong dollar and low interest rates, which made it cheaper for them to buy products and investments such as real estate.
Tsang expected a budget surplus of HK$3.9 billion (US$500.5 million) in the 2011-2012 fiscal year, equivalent to 0.2 percent of the city s GDP.
However, he cautioned that rising inflation was now a serious concern for Asian economies.
The soft U.S. dollar and possible sustained increase in global food and commodity prices will put more inflationary pressure on Hong Kong, he said.
On top of these, the continued rise in the mainland s food prices and local rents are expected to have a more noticeable effect on our inflation this year, he said.
Tsang forecast that underlying inflation rates for 2011 as a whole would average 4.5 percent.
He also announced new relief measures in response to growing public concern about rising living costs.
He said the new relief measures for the 2011-2012 year would include:
<2022>A residential electricity subsidy of HK$1,000, which will cost the government about HK$4.7 billion.
<2022>A property rate payment exemption for homeowners for the 2011-2012 year subject to a ceiling of HK$1,500 per quarter for each rateable property. The proposal will cost the government approximately HK$9.9 billion.
<2022>A two-month rent-free period for public-housing tenants.
<2022>An extra allowance equal to a one-month standard rate payment for those receiving comprehensive social security assistance, old age allowance and disability allowance.
<2022>An increase in the tax exemption ceiling for taxpayers maintaining dependent parents and grandparents, aged 60 years or more, to HK$36,000 a year from the current HK$30,000.
<2022>An increase in the deduction ceiling for elderly residential care expenses to HH$72,000 from the current HK$60,000.
<2022>An increase in both the child allowance and the additional allowance for a child in the year of their birth of 20 percent, from HK$50,000 to HK$60,000.
Tsang also proposed to increase the rate of each tax band for the first registration tax for private cars by about 15 percent. He announced smokers in Hong Kong would have to pay HK$0.5 more per stick, equivalent to an increase in tobacco duty by 41.5 percent.
(SD-Agencies)
