Rebate to benefit 1.4m taxpayers
Updated: 2008-02-28 07:10
By Teddy Ng(HK Edition)
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Financial Secretary John Tsang yesterday said as many as 1.4 million salaries taxpayers would benefit from a tax rebate, adding that the move would cost the government HK$12.4 billion.
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Giant TVs in Causeway Bay show Financial Secretary John Tsang delivering his budget address to the Legislative Council. Edmond Tang |
Tsang said that Hong Kong tax base was narrow, and the government will put forward proposals on widening the base for public discussion within the next two years.
He also said most of the tax concessions are one-off as the government needs to maintain sustainable financial policies.
Among the taxpayers, 465,000 who earn between HK$100,000 and HK$200,000 a year will enjoy an average rebate of HK$920.
Some 91,000 taxpayers earning HK$900,000 or more a year will have a rebate of HK$25,000, the capped amount of the proposal.
About 1 million taxpayers will pay no more than HK$5,000 in tax after the rebate.
But the government will not send cheques to the taxpayers. Instead, the rebates will be reflected in the tax demand notes to be sent to taxpayers by the end of this year or early 2009.
Tsang said sending cheques will incur administration cost and deepen inflation as the public may immediately spend the money.
"It will be better for the rebate to be effective at a later time as the decline of US economy may cause an impact on us during the later half of this year or 2009," he said.
He added that more low-income people will benefit by capping the rebate amount at HK$25,000.
Besides salaries tax rebate, 100,000 companies and the same number of property taxpayers will also enjoy a rebate of maximum HK$25,000 in profits and property tax. The two rebate proposals will cost the government HK$6.13 billion.
Salaries taxpayers will also have more money in pockets as the government will also lower salaries tax standard rate by one percentage point to 15 percent; increase basic personal allowance from HK$100,000 to HK$108,000; increase married person's allowance from HK$200,000 to HK$216,000; and widen the tax bands from HK$35,000 to HK$40,000.
The measures on adjusting the salaries tax mechanism will cost the government HK$2.91 billion. Deduction ceilings for charitable donations will increase to 35 percent of income from 25 percent.
A single person with an annual salary of HK$120,000 will only pay HK$240 salaries tax under the adjusted mechanism, saving HK$160. A married couple earning HK$300,000 with one child will save HK$1,070 in the next fiscal year, only paying HK$680.
A married couple with one child and two dependent parents with an annual salary of HK$480,000 will save HK$4,200, paying HK$14,180 in tax. With the increase of basic personal allowance, 97,000 taxpayers will not be asked to pay salaries tax.
"We believe that the number of taxpayers will increase should we improve our economy, letting the citizens get a better job and a pay rise," Tsang said.
The business sector will also benefit from the budget as Tsang proposes to lower profits tax rate by one percentage point to 16.5 percent, costing the government HK$4.4 billion a year.
Business registration fee will be waived, costing the government HK$680 million.
(HK Edition 02/28/2008 page1)