Govt takes load off taxpayers’ back

Salaries tax reduced by 75% capped at HK$20,000, children allowance raised

The government announced a more generous than expected sweeteners package of HK$34 billion to “alleviate financial burden of the public” — a 70 percent rise from last year’s Budget.

Some 1.82 million taxpayers will benefit from a 75 percent reduction in salaries tax, capped at HK$20,000, the highest since 2008. The reduction will be reflected in the final tax payable for 2014-15.

In some recent leaks reported by local media, various sources had estimated that the ceiling would not surpass HK$15,000.

Profits tax will also be reduced by 75 percent which will benefit 130,000 taxpayers. Some 3.15 million private property owners will also see a rates waiver for the first two quarters of the next financial year, starting April – subject to a ceiling of HK$2,500 per quarter.

Financial Secretary John Tsang Chun-wah said the reduced salaries tax and profits tax will cost the government HK$15.8 billion and HK$1.9 billion respectively. The waiver in property rates will reduce government revenue by HK$7.7 billion, Tsang added.

Tsang also increased basic and additional child allowances from HK$70,000 to HK$100,000 from 2015-2016 onward, which will cost the government HK$2 billion each year.

He said he would increase public expenditure in a “prudent manner” and would commit resources “as and when justified and needed”.

Tsang forecast a HK$63.8 billion surplus for the financial year ending next month — six times his original projection. The revision is mainly due to a 60 percent increase of stamp duties, where 75 percent comes from Double Stamp Duty that was not budgeted, Tsang said.

Chairman of Democratic Alliance for the Betterment and Progress of Hong Kong Tam Yiu-chung welcomed the government’s care for the middle class. He also expressed his positive view on the shortterm outlook of the city’s development as Tsang projected a HK$30 billion surplus for the next fiscal year.

Chairman of Business and Professionals Alliance for Hong Kong Andrew Leung Kwanyuen said the relief measures are key to social stability and people’s confidence in the future.

Meanwhile, John Tsang also Annual Income Basic Allowance Child Allowance introduced sweeteners totaling HK$6.6 billion for the disadvantaged members of the population, which could translate into an 80 percent hike on last year’s figure.

Some HK$5.5 billion will cover an extra two months’ worth of allowances for recipients of Comprehensive Social Security Assistance, Old Age Allowance (fruit money), Old Age Living Allowance and Dis- ability Allowance.

This marked the first time the government has given out two months’ extra allowances since 2008. During the years in between, one month’s extra allowance had been the regular practice.

One month of rent will be waived for low-income tenants living in rental public units, prompting an expenditure of HK$1.1 billion.

The government will also address the need of those low-income working families that have not benefited from social welfare in future budgets, Chief Secretary Carrie Lam Cheng Yuet-ngor said separately. She urged the city’s Community Care Fund to continue to shoulder the responsibility before the government works out a relief plan for the group.