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Leaving Wealth with the People
164. I will now move to my third area of action, leaving wealth with the people. If revenue exceeds the level needed to meet operating requirements, then, after investing for the long-term development of Hong Kong and supporting disadvantaged groups, the Government should consider reducing the tax burden on the public.
Salaries Tax and Tax under Personal Assessment
Tax Rates
165. On salaries tax and tax under personal assessment, in his Policy Address the Chief Executive announced the lowering of the standard rate of salaries tax in 2008-09 by one percentage point to 15 per cent. This takes us back to the level in 2002-03. This standard rate is also applicable to tax under personal assessment, profits tax of unincorporated businesses, and property tax. This proposal will cost the Government $960 million a year.
Tax Reduction
166. I now propose a one-off tax reduction of 75 per cent of salaries tax and tax under personal assessment for 2007-08, subject to a ceiling of $25,000. The reduction will be reflected in the taxpayer's final tax payable for 2007-08. This proposal will cost the Government $12.4 billion in 2008-09 and benefit 1.4 million taxpayers. After the reduction, about a million taxpayers will pay no more than $5,000 in tax.
Tax Allowances
167. In addition to the one-off tax reduction, I propose to raise the basic allowance and the single parent allowance from $100,000 to $108,000. I also propose to increase the married person¡¦s allowance from $200,000 to $216,000. These proposals will cost the Government $1.31 billion annually.
168. Upon implementation of the proposals, all the major allowances and tax rates will have reverted to their 2002-03 levels. The child allowance, allowance for dependent parent/grandparent aged 55 to 59 and the deduction ceilings for self-education expenses and charitable donations will all be higher than their 2002-03 levels.
Tax Bands
169. I also propose to widen tax bands from $35,000 to $40,000. Upon implementation of the proposal, tax bands will be wider than in 2002-03. The proposal will cost the Government $1 billion annually.
Profits Tax
Tax Rate
170. As regards profits tax, the Chief Executive announced in his Policy Address the lowering of the corporate profits tax rate to 16.5 per cent in 2008-09, a decrease of one percentage point. This proposal will cost the Government $4.4 billion a year.
Tax Reduction
171. Additionally, in order to support small and medium enterprises, I propose a one-off tax reduction of 75 per cent of profits tax for 2007-08, subject to a ceiling of $25,000. The reduction will be reflected in the taxpayer's final tax payable for 2007-08. The proposal will benefit all 100 000 companies liable to profits tax and cost the Government $1.73 billion.
Business Registration Fee
172. I further propose to waive the business registration fee for 2008-09 to benefit all companies. This proposal will cost the Government $1.6 billion in the year.
Property Tax
173. I propose a one-off tax reduction of 75 per cent of property tax for 2007-08, subject to a ceiling of $25,000. The reduction will be reflected in the taxpayer's final tax payable for 2007-08. The proposal will benefit 100 000 taxpayers and cover 115 000 properties. It will cost the Government $680 million.
Rates
174. As for rates, I propose to waive rates for 2008-09, subject to a ceiling of $5,000 per quarter for each rateable tenement. It is estimated that 99 per cent of domestic properties and 85 per cent of non-domestic properties will be subject to no rates in the year. This proposal will cost the Government $11.2 billion.
(To be continued)
Ends/Wednesday, February 27, 2008
Issued at HKT 12:29
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