The government announced a series of tax rebates as well as measures to reduce tax burdens in its 2018 budget on Wednesday.
Financial Secretary Paul Chan announced that salaries tax and tax under personal assessment will be reduced by 75 per cent for 2017-2018, subject to a ceiling of HK$30,000. This will benefit 1.88 million taxpayers and reduce tax revenue by HK$22.6 billion, the government said.
Profits tax will also be reduced 75 per cent for 2017-2018 subject to a ceiling of HK$30,000, benefitting 142,000 taxpayers and reducing tax revenue by HK$2.9 billion.
Meanwhile, property rates will be waived for four quarters for 2018-2019, with a ceiling of HK$2,500 per quarter for each rateable property.
The government also announced a series of measures to “alleviate the tax burden on salary earners,” including widening the tax bands for salaries tax from HK$45,000 to HK$50,000 and increasing the number of tax bands from four to five. Marginal tax rates will also be adjusted.
Relief for families
Child allowances were increased from HK$100,000 to HK$120,000, a measure that will benefit 335,000 taxpayers. Another 607,000 will benefit from the increase in allowance for those with a dependent parent or grandparent, and the reduction ceiling for elderly residential care expenses will also be raised.
The two measures will reduce tax revenue by HK$1.31 billion and HK$580 million a year respectively.
The government also introduced a personal disability allowance at a rate on par with the current HK$75,000 disabled dependent allowance.
Chan also announced that a married couple could now decide whether to elect personal assessment for their taxes rather than having to jointly make an election, as is currently required. The relaxation of the requirement would provide greater flexibility to taxpayers, Chan said.
“Over the years, Hong Kong has weathered many storms, and always emerged stronger through changes. What remain unchanged are our commitment to diversity and openness, our pursuit of fairness and justice, and our aspiration for a happy life,” Chan said in his concluding remarks. “I strongly believe that as long as we embrace hope, find the right direction and steel our resolve, we will be able to brave the wind and the billows to turn our dreams into reality.”
Chan announced a surplus of HK$138 billion from the 2017-18 financial year. Fiscal reserves are expected to reach HK$1,092 billion by March 31, while the Housing Reserve will reach HK$78.8 billion.
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