Financial Secretary Henry Tang, as expected in the budget for the 2007-08 financial year, introduced various tax concessions and relief measures to benefit different strata of society.

In his budget speech, Tang said the government would mete out some HK$20 billion in permanent tax relief measures and one-off tax rebates on top of HK$900 million to alleviate the middle-class' financial burden and help the disadvantaged people.

For the benefit of salaried taxpayers, Tang will revert the marginal tax bands and tax rates to the 2002-03 level.

This means the marginal tax band will be increased to HK$35,000 from HK$30,000, while the two highest marginal tax rates will be reduced from 19 percent and 13 percent to 17 percent and 12 percent respectively.

The allowance for each child will be increased from HK$40,000 to HK$50,000. And in the year a child is born, an additional allowance of HK$50,000 will be granted.

Besides, the maximum amount for reduction of education expenses will be increased from HK$40,000 to HK$60,000.

The above measures will cost HK$4.9 billion and benefit 1.1 million taxpayers.

Again, the amount of stamp duty will be lowered to a fixed amount of HK$100 for properties priced between HK$1 and HK$2 million. This will cost the HK$250 million and benefit 30,000 homebuyers.

As for one-off rebates, taxpayers will enjoy refund up to 50 percent of their 2006-07 tax bills capped at HK$15,000. This costs HK$8.1 billion and will help all the 1.35-million taxpayers.

Also, households will be exempted from rates for two quarters up to a HK$5,000 ceiling. As many as 99 percent of the households will enjoy exemption for two quarters from this exercise that costs HK$5.2 billion.

For the 1 million-plus social security and old-age allowance recipients, they will be offered an amount equivalent to one month's hand-outs. This will cost the government HK$1.5 billion.

Duties on wine and beer will also decreased by 50 percent.

To alleviate poverty and help the disadvantaged, Tang has promised HK$900 million for various initiatives for the handicapped children, elderly and family violence victims.

The most notable is a HK$300 million traveling allowance pilot scheme that encourages people living in four stipulated remote districts to find jobs in other districts.

An applicant who proves he earns less than HK$5,600 monthly and works in other districts, will be granted HK$600 per month for not more than six months. The scheme will be operated for one year initially.

Tang has also set aside HK$300 million for a children development fund with a view to eliminating generational poverty.

Tim Lui, a tax partner at PricewaterhouseCoopers, said it was appropriate to offer one-off tax rebates instead of direct tax reduction.

"Direct tax cuts will not benefit too many people, while increase of the tax allowances will have far-reaching impacts and narrow the tax net," he said.

Nelson Chow, chair-professor of social work and social administration at the University of Hong Kong, said the traffic allowance for people to find jobs across the districts was a good move.

He suggested job creation in specific districts so that people do not feel the need to find jobs in other districts.

Given there are about 250,000 children living in poverty, he proposed a children development fund worth HK$1 billion for five years to facilitate small class teaching with better facilities