Salaries tax and tax under personal assessment for the fiscal year to March 31 will be reduced by 75 per cent, subject to a ceiling of HK$20,000 (US$2,570), the Hong Kong government announced Wednesday.
The measures will benefit 1.96 million taxpayers and reduce government revenue by HK$17 billion, Financial Secretary John Tsang Chun-wah told the Legislative Council in his ninth budget speech.
“Local consumption has been a key driver for Hong Kong’s economic growth in recent years,” Tsang said.
“Easing the burden of citizens will have a stimulus effect.”
In the new fiscal year, which starts April 1, the basic allowance and the single parent allowance for salaries tax and personal assessment will be raised to HK$132,000 from HK$120,000, and the married person’s allowance to HK$264,000 from HK$240,000.
These proposals will benefit 1.93 million taxpayers and reduce tax revenue by HK$2.9 billion a year.
The government said it will increase the allowance for maintaining a dependent parent or grandparent aged 60 or above to HK$46,000 from HK$40,000.
It will increase the allowance for maintaining a dependent parent or grandparent aged between 55 and 59 to HK$23,000 from HK$20,000.
The government will also waive rates for four quarters in 2016-17, subject to a ceiling of HK$1,000 per quarter for each rateable property.
This will benefit 3.17 million properties and reduce government revenue by HK$11 billion.
It will provide an extra allowance to social security recipients, equal to one month of the standard Comprehensive Social Security Assistance payments, Old Age Allowance, Old Age Living Allowance or Disability Allowance.
This will involve an additional expenditure of HK$2.8 billion.
Tsang said these tax relief measures will cost HK$38.8 billion in total and boost gross domestic product growth for 2016 by 1.1 percentage point.
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