Govt Uses Record Surplus To Sweeten Up Taxpayers

Financial Secretary Paul Chan has announced a series of tax breaks that will cut bills for hundreds of thousands of people, as he set out in his budget how HK$52.4 billion of the government's record HK$138 billion surplus will be ploughed back into the community.

In line with last year, Chan announced a reduction in salaries tax of up to 75 percent. But the ceiling for the current financial year is being increased to HK$30,000, up from the previous HK$20,000. Almost 1.9 million taxpayers will benefit, Chan said, while the move will see the government's coffers lose out on HK$22.6 billion.

The tax bands are also to be widened, from HK$45,000 to HK$50,000, with a fifth bracket to be introduced. The marginal tax rates for these bands will also be tweaked to 2 percent, 6 percent, 10 percent, 14 percent and 17 percent.

The band changes, which will start from the 2018-2019 tax year, are expected to reduce tax bills for 1.34 million people and cost the government HK$4.09 billion a year in lost revenue.

There's also a reduction in profits tax of 75 percent, subject to a maximum of HK$30,000, a move which will benefit 142,000 taxpayers this financial year.

Family allowances are also going up from April, with the basic and additional child allowances rising from the current HK$100,000 to HK$120,000.

The allowance for looking after a dependent parent or grandparent aged 60 or above is to increase from the current HK$46,000 to HK$50,000, while the rate for dependent parents or grandparents aged between 55 and 59 will rise from HK$23,000 to HK$25,000.

Taxpayers whose parents or grandparents are in a residential care home will be able to claim a tax deduction of up to HK$100,000.

Rates of up to HK$2,500 per quarter will be waived for the whole of the coming financial year. This is much higher than the HK$1,000 per quarter maximum last time and will set the government back HK$17.8 billion.

Chan also announced that extra social security payments costing the government HK$7 billion will be given out, equivalent to two months' worth of the standard CSSA payments, Old Age Allowance or Disability Allowance. HK$379 million will be spent on similar arrangements for recipients of the Low-income Working Family Allowance and Work Incentive Transport Subsidy.

There's also some short-term relief for low-income households, with one-off grants of HK$2,000 for students from poor families. Candidates for the 2019 Hong Kong Diploma of Secondary Education Examination will also have their examination fees paid for them.