Hong Kong's top financial official on Wednesday proposed a basket of measures aimed at returning wealth to the people, including tax cuts and concessions, against the background of a record high revenue surplus.

The package of initiatives and concessions aim to help the disadvantaged, enhance Hong Kong's competitiveness and ensure sustainable development, said John Tsang, financial secretary of the Hong Kong Special Administrative Region government, while delivering his budget speech at the Legislative Council.

He forecast a surplus in the Consolidated Account of 115.6 billion HK dollars (14.8 billion U.S. dollars) and a surplus of 63. 7 billion HK dollars (about 8.19 billion U.S. dollars) in the Operating Account for 2007-08.

To return the wealth to the people, he proposed a one-off tax reduction of 75 percent of salaries tax and tax under personal assessment for the 2007-08 fiscal year, up to a maximum of 25,000 HK dollars (3,213 U.S. dollars).

About one million taxpayers would pay no more than 5,000 HK dollars in tax after the reduction. The move would cost the Government 12.4 billion HK dollars (1.59 billion U.S. dollars) in 2008-09 and benefit 1.4 million taxpayers.

Tsang also proposed raising the basic allowance and the single parent allowance from 100,000 HK dollars to 108,000, and increasing the married person's allowance from 200,000 HK dollars to 216,000.

"Upon implementation of the proposals, all the major allowances and tax rates will have reverted to their 2002-03 levels," he said.

He would like to lower the salaries tax and personal assessment tax standard rate by one percentage point, to 15 percent, from the next fiscal year, and lower profits tax to 16.5 percent. He also proposed widening the tax bands from 35,000 HK dollars to 40,000 HK dollars.

Small and medium businesses are also in line for a one-off tax reduction with a proposed 75 percent concession of profits tax for2007-08, up to a maximum of 25,000 HK dollars. Business registration fees will also be waived for 2008-09.

On the environmental front, Tsang proposed a reduction of 30 percent, 50 percent or 100 percent in the first registration tax of commercial vehicles meeting Euro V emissions standards, and a 100 percent profits tax deduction for capital expenditure on environmentally-friendly machinery and equipment in the first year of purchase.

Duties on wine, beer and all other alcoholic beverages except spirits will be exempt, to help promote Hong Kong as a trade and distribution center for quality wine in Asia.