Welcome rebate: The Budget proposes to waive 50% of salaries tax and tax under personal assessment assessed for 2006-07, up to a maximum of  $15,000.

In keeping with his aim of leaving wealth with the people if it is affordable, Financial Secretary Henry Tang proposes several salaries-tax relief measures - including reverting the marginal bands and marginal rates to their 2002-03 levels.

Under this proposal, the band width will be increased from $30,000 to $35,000, meaning those making $35,000 a year or less are subject to only 2% tax. The two highest marginal tax rates will be reduced from 13% to 12%, and from 19% to 17%. The basic allowance and standard rate - 16% - will remain unchanged.

To reduce parents' financial burden in raising their children, Mr Tang proposes increasing the child allowance from $40,000 to $50,000 for each child. His Budget also calls for the introduction of an additional one-off child allowance of $50,000 for each child in the year they are born.

In its efforts to promote the development of a knowledge-based economy, the Government has been encouraging employees to seek continual self-advancement through learning. To complement this, Mr Tang suggests increasing the maximum amount of deduction for self-education expenses from $40,000 to $60,000.

Concessions to benefit 1.1m taxpayers

These concessions, which would be implemented in 2007-08, will benefit 1.1 million taxpayers and cost the Government about $4.9 billion a year in lost revenues.

Because the Government's 2006-07 fiscal position is so much better than originally estimated, the Financial Secretary proposes to waive 50% of salaries tax and tax under personal assessment assessed for 2006-07, up to a maximum of  $15,000.

The amount waived would be deducted from the taxpayer's final tax payable for 2006-07. This move would cost the Government about $8.1 billion in 2007-08.