HONG KONG, Oct 10 Hong Kong plans to cut taxes in its budget next year as the economy gal

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HONG KONG, Oct 10 (Reuters) Hong Kong plans to cut taxes in its budget next year as the economy gallops ahead and swells government coffers, Chief Executive Donald Tsang said in a policy address on Wednesday.

Hong Kong would trim individual salary and corporate income taxes by a percentage point each, to 15 percent and 16.5 percent, respectively, Tsang said. The city's leader said the government had chosen to reduce taxes gradually, wary of the impact on revenue.

During this year's re-election campaign, Tsang vowed to bring salaries and corporate tax rates back down to 2002-2003 levels, responding to persistent calls for tax cuts in view of a swelling fiscal surplus that hit HK$58.6 billion (US$7.55 billion) in the last financial year.

Tsang pledged to gradually lower income and corporate taxes to 15 percent during his five-year term -- from 16 percent and 17.5 percent respectively -- economic conditions permitting.

($1=HK$7.759) REUTERS MP DS1423

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