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HK's Financial Secretary Unveils Tax Cuts And Concessions In Budget, by Mary Swire, for LawAndTax-News.com, Hong Kong
Thursday, February 28, 2008
In his first Budget, Financial Secretary John Tsang forecast a record $115.6bn
surplus, and proposed a basket of measures aimed at returning wealth to the
people.
"I hope that this Budget will lessen people's burden and help them handle
their various challenges," Mr Tsang told the Legislative Council as he
delivered his Budget.
His package of initiatives and concessions aim to help the disadvantaged, enhance
Hong Kong's competitiveness and ensure sustainable development. Mr Tsang has
forecast a surplus in the Consolidated Account of $115.6bn and a surplus of
$63.7bn in the Operating Account for 2007-08.
To return the wealth to the people, he proposed a one-off tax reduction of 75%
of salaries tax and tax under personal assessment for the 2007-08 fiscal year,
up to a maximum of $25,000. Around 1 million taxpayers would pay no more than
$5,000 in tax after the reduction.
The move would cost the Government $12.4 billion in 2008-09, and benefit 1.4
million taxpayers, he explained.
Tsang also proposed raising the basic allowance and the single parent allowance
from $100,000 to $108,000, and increasing the married person's allowance
from $200,000 to $216,000.
"Upon implementation of the proposals, all the major allowances and tax
rates will have reverted to their 2002-03 levels," Mr Tsang stated.
The Financial Secretary further announced that he would like
to lower the salaries tax and personal assessment tax standard rate by one percentage
point, to 15%, from the next fiscal year, and lower profits tax to 16.5%. Tsang
also proposed widening the tax bands from $35,000 to $40,000.
Small and medium businesses are also in line for a one-off tax reduction, with
a proposed 75% concession of profits tax for 2007-08, up to a maximum of $25,000.
Business registration fees will also be waived for 2008-09.
To help lower-paid people, Mr Tsang proposed a $6,000 one-off injection into
Mandatory Provident Fund accounts of those employees and self-employed people
earning no more than $10,000 a month.
Tsang has also proposed to waive rates for 2008-09, subject to a ceiling of
$5,000 per quarter for each rateable tenement. It is estimated that 99% of
domestic properties and 85% of non-domestic properties will not be subject to
rates in the year.
"The impact of these measures will be felt in the medium to long term and
will not have any short-term economic impact," Mr Tsang explained.
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