HONG KONG: Hong Kong’s tax revenue swelled to a record-breaking HK$301.9 billion in the fiscal year 2014-15, up 24 per cent on the previous year’s takings.
The rise was largely due to an upsurge in stamp duty revenue, which rose 80 per cent to HK$74.8 billion.
But Inland Revenue Department commissioner Wong Kuen-fai said stamp duty collection went up sharply only because it had taken the Legislative Council a year and a half to pass property cooling measures. That meant the double stamp duty imposed on people buying second properties since February 2013 was only officially received by the government after the approval from lawmakers in July last year.
The record-breaking tax revenue stands in stark contrast to the government’s forecast a year ago, when the department estimated a drop of 0.3 per cent in tax revenue for the last fiscal year.
“It is not easy to do a tax forecast,” Wong said.
“Hong Kong has a small but open economy. Its economic performance can easily be affected by external factors.”
Profits tax and salaries tax both jumped to record highs, rising 14 per cent to HK$137.8 billion and 7 per cent to HK$59.3 billion respectively.
There were also record-high takings from property tax and betting duty, which climbed by 14 per cent to HK$2.9 billion and by 8 per cent to HK$19.5 billion respectively.
However, salaries tax arrears rose 19 per cent to HK$2.5 billion while properties tax arrears climbed 37 per cent.
Looking ahead, Wong forecast that tax revenue for the coming fiscal year would fall by 12 per cent to HK$267 billion.
Breaking down the figures, he said he expected profits tax to drop 3 per cent and salaries tax to fall 9 per cent because the financial secretary had increased tax allowances.
“The financial secretary has introduced more tax allowance this year compared to last year. It was capped at HK$10,000 last year but this year it is HK$20,000, which is double. That is why the forecast is for profits tax and salaries tax to drop,” he said.
Dr Billy Mak Sui-choi from Baptist University’s department of finance and decision sciences said the higher salaries tax receipts did not necessarily mean the economy was improving.
He said it was possible that the salaries tax receipts rose only because workers on high incomes were getting paid even greater sums of money.
According to the department’s data, 8.8 per cent of Hong Kong’s taxpayers made more than HK$900,000 for the year. Almost 10 per cent of taxpayers made between HK$600,000 and HK$900,000.
Mak also said that the low tax rate meant Hong Kong had been able to attract overseas companies to set up offices in the city.
“The low tax rate gives Hong Kong an edge,” he said.
“But the government needs to think about how to make office rents cheaper. There is a land planning problem.”
