The budget report Financial Secretary John Tsang Chun-wah delivered in the Legislative Council Wednesday takes steps in the right direction but lacks long-term vision, accountants’ groups say.
They highlighted the absence of detailed policies to tackle the problem of the city’s aging population and that of its narrow tax base.
It’s a good decision to provide rebates on salary tax and profit tax and increase the child allowance for the coming fiscal year starting April 1, Theresa Chan, deputy chairwoman of the taxation committee at CPA Australia’s Greater China division, told EJ Insight.
However, it is disappointing that the government is not increasing the personal allowance and the allowance for dependent parents, Chan said.
The budget report also failed to elaborate on how to broaden Hong Kong’s tax base and maintain a sustainable fiscal position for the long run as the population ages, she said.
Chan recommended that the government provide more tax benefits to small and medium-sized enterprises and start-ups.
Tsang said in his report that the government may “explore again the feasibility of broadening the tax base in due course with the aim of stabilising government revenue and creating room for direct tax concessions”. The government failed in its attempt to introduce a goods and services tax in 2006.
“The government addressed the issues of old age population but without concrete measures,” Kenneth Wong, co-chairman of the tax subcommittee at ACCA Hong Kong, said in an emailed press release.
Wong said the government should consider relaxing the residence threshold for the dependent parent allowance and dependent grandparent allowance and aligning it with the requirement for the Old Age Allowance — that is, not more than 305 days a year of absence from Hong Kong.
“In the long run, we expect that the government will continue further relief policies in future budgets, so that household sectors can sustainably keep pace with economic growth,” he said.
“These include widening income tax bands to HK$50,000 to reflect an inflationary adjustment, allowing a deduction equal to the minimum wage of HK$4,110 per month for employing one domestic helper and relaxation of the home loan interest provision.”
Florence Chan, who chairs the taxation faculty executive committee at the Hong Kong Institute of Certified Public Accountants, said: “The budget’s bringing up of stabilizing tax revenues, broadening the tax base, and reopening discussion of GST, though in the right direction of thinking for Hong Kong’s long-term growth, are not much more than lip service, as there is no mention of details or timeframe.”
As an advocate for sustainability, the institute has recommended environmental and social measures, such as building allowances for environmentally sound structures and tax deductions for food donations, to push Hong Kong toward international good practices, she said.
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