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| HK to Adopt a Series of Tax Relief Measures |
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As the government's financial position has improved following the strong recovery of economy, a series of tax relief measures will be adopted, Hong Kong Financial Secretary Henry Tang said in his presentation of the 2007-2008 Budget to the Legislative Council Wednesday morning. He proposed to revert the marginal bands and marginal rates for salaries tax to their 200203 levels. In other words, the band width will be increased from 30,000 HK dollars to 35,000 HK dollars, and the two highest marginal tax rates will be reduced from 13 percent and 19 percent to 12 percent and 17 percent respectively. The basic allowance and standard rate will remain unchanged. To reduce the burden of parents in raising their children, he proposed to increase the child allowance from 40,000 HK dollars to 50,000 HK dollars for each child. He also proposed to introduce an additional one-off child allowance of 50,000 HK dollars for each child in the year of birth. To facilitate the development of a knowledge-based economy, the government has been encouraging employees to seek continual self- advancement through learning. To this end, Tang proposed to increase the maximum amount of deduction for self-education expenses from 40,000 HK dollars to 60,000 HK dollars. The implementation of the foregoing tax concessions for individuals will start in 2007-08 and reduce the tax burden of 1.1 million taxpayers. It will cost the government about 4.9 billion HK dollars a year, Tang said. As most middle-class families purchase their own home, Tang proposed to reduce the rate of stamp duty on transactions of properties with a value between one million and two million HK dollars from 0.75 percent to a fixed amount of 100 HK dollars, which is the same level of duty as for properties with a value at or below one million HK dollars. This proposal comes into immediate effect. It will benefit about 30,000 home buyers and cost the government about 250 million HK dollars a year, Tang said. Tang also proposed that the duty rate on beer and other types of liquor containing not more than 30 percent of alcohol be reduced from the current 40 percent to 20 percent, and that on wine from the current 80 percent to 40 percent. These proposals take immediate effect, and will cost the government about 350 million HK dollars a year. He said he is willing to consider the idea of abolishing alcoholic beverages further if it enjoys broad community support. Currently, the duty-free quantities of tobacco and liquor that local residents are allowed to bring in when entering Hong Kong are not the same as for visitors. Tang proposed to align them. He proposed to raise the duty-free quantity of alcoholic beverages that Hong Kong residents may bring back from the current 750 milliliters of still wine to one liter and to apply this to all liquors. On the other hand, he proposed to reduce the quantity of duty- free tobacco that visitors are allowed to bring into Hong Kong to that for local residents. For example, the quantity of duty-free cigarettes for a visitor would be reduced from the current ten packets to three. These proposals will take effect after the relevant subsidiary legislation has been passed. He also proposed to waive 50 percent of salaries tax and tax under personal assessment assessed for 200607, subject to a ceiling of 15,000 HK dollars. The amount waived will be deducted from the taxpayer's final tax payable for 2006-07. This proposal will cost the government about 8.1 billion HK dollars in 2007-08. Tang proposed to waive rates for the first two quarters of 2007 08, subject to a ceiling of 5,000 HK dollars per quarter for each ratable tenement. It is expected that 99 percent of domestic properties and 86 percent of non-domestic properties will be subject to no rates in these two quarters. This proposal will cost the government about 5.2 billion HK dollars in 2007-08. To share the fruits of economic prosperity with recipients of CSSA (Comprehensive Social Security Assistance) and Social Security Allowance (SSA), Tang also proposed to provide one additional month of standard rate CSSA payments for CSSA recipients and one additional month of allowance for SSA recipients. This proposal will benefit over one million people and cost the government about 1.5 billion HK dollars in 2007-08. (Xinhua News Agency February 28, 2007) |
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