Financial Secretary John Tsang proposed a 75 percent slash on personal income tax for 2015/2016 during his ninth budget speech today.
Tsang estimated that some 1.96 million taxpayers would benefit from the proposed cuts, which would see taxes capped at a maximum of HKD20,000 in a move predicted to cost the government HKD17 billion, the SCMP reports.
The financial secretary also announced cuts to business registration fees and tax in order to benefit small- and medium-sized enterprises (SMEs).
Social security recipients will receive an extra allowance, equal to a month of the standard rate of social security assistance payments, old age allowance, old age living allowance or disability allowance, which will cost an additional HKD2.8 billion.
Basic allowance and single parent allowance will also be raised from HKD120,000 to HKD132,000, while the married person’s allowance will also increase from HKD240,000 to HKD264,000. These changes will apparently reduce tax revenue by HKD2.9 billion per year, Tsang said.
However, it wasn’t all rosy, as Tsang hit out at “irrational and uncivilised tactics” which have tarred Hong Kong’s reputation.
Tourism, which contributes 5 percent of Hong Kong’s GDP and provides 270,000 jobs, had experienced rapid growth in the last ten years, only to be allegedly stymied by the recent behaviour of locals, such as “hurling abuse at visitors” and “kicking tourists’ suitcases”.
“These destructive acts have not only damaged the economy, but have also severely tarnished Hong Kong’s reputation as a welcoming city internationally,” Tsang rebuked. Citizens who claimed to be doing such things out of love for Hong Kong shouldn’t use their freedom of expression “at the expense of peace”.
In response to the Mong Kok riot that shook Hong Kong earlier this month, Tsang remarked that it had turned the city into a “strange and alien place”, and that he was “distressed and angry” over the violence that erupted over Chinese New Year.
Tsang predicted that social conflicts would exacerbate the “already adverse economic environment”, something that Tsang said would only intensify due to it being an election year.
The Hong Kong economy saw 2.4 percent growth in 2015, in comparison to 2.3 in 2014. However, Tsang predicted a rather lethargic 1-2 percent growth for 2016 due to the stagnation of external economies and the much-documented economic slowdown of mainland China.
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