While the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area was announced last week, there has been no mention of the so-called “Hong Kong tax for Hong Kong people”, an issue that has been a concern for people in the city.
As compared to Hong Kong’s low tax regime, the personal income tax rate in the mainland can reach as high as 45 percent as of now.
In order to encourage Hongkongers to pursue careers in the Greater Bay Area, some regions are offering tax concessions to Hong Kong people. For instance, the special economic zone in Qianhai, Shenzhen is now providing subsidies for high-end, in-demand talents outside the mainland once their taxable income level exceeds the 15 percent ceiling.
Also, authorities in the Hengqin Free Trade Zone in Zhuhai have fully enforced the policy of “Hong Kong tax for Hong Kong people” and “Macau tax for Macau people”.
However, there is talk that the reason why “Hong Kong tax rates for Hong Kong people” was not mentioned in the Outline Development Plan is because central authorities are concerned about the potential controversies in relation to such policy.
It is argued that the mainland has come a long way 40 years into its economic reforms, and that it no longer needs to resort to special measures in order to draw overseas talent.
Also, giving Hong Kong people preferential tax treatment will only benefit Hong Kong people. Feelings of people in other mainland cities within the Bay Area need to be taken into consideration, during the implementation of the measure, according to the talk.
Besides, even not every member of the pro-establishment camp is in favor of the issue.
For example, it is understood that among the 36 Hong Kong deputies to the National People’s Congress (NPC), some with mainland business backgrounds do not buy the idea of “Hong Kong tax rates for Hong Kong people”.
That said, certain pro-establishment figures, including Tam Yiu-chung, a member of the NPC Standing Committee, have said recently that they will continue to push for the implementation of this special measure.
There is talk that while the central authorities are being very cautious about launching the policy, they have never rejected the idea outright.
A pro-Beijing figure who is familiar with the situation in the mainland said Beijing might, according to his view, launch pilot schemes on “Hong Kong tax rates for Hong Kong people” in certain key industries such as the innovation and technology sector first, so as to lure Hong Kong talents to the Bay Area.
As far as other mainland cities in the Bay Area are concerned, they could provide “sweeteners” such as subsidies that are comparable to “Hong Kong tax for Hong Kong people”.
This article appeared in the Hong Kong Economic Journal on Feb 26
Translation by Alan Lee
[Chinese version 中文版]
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