Tax amendments passed to lighten workers' burdenLocal | Phoenix Un May 17, 2018
The Inland Revenue (Amendment) Bill received third reading yesterday, which effectively imposed tax favors for taxpayers.
They include a one-off reduction in salaries tax, profit tax and tax under personal assessment by 75 percent, with a ceiling of HK$30,000.
It also widens salaries tax bands from HK$45,000 to HK$50,000, while hiking the number of tax bands from four to five.
Other measures included enlarging the basic and additional child allowance from HK$100,000 to HK$120,000, and raising the allowance for supporting parents and grandparents.
The tax system adjustment will reduce annual tax income by HK$6.4 billion, while the one-off reduction will see the government reap HK$22.5 billion less.
Legislator Aron Kwok Wai-keung, of the Federation of Trade Unions, said the tax suppression on workers was less this year as the government implemented a series of alleviation measures.
There are two methods to calculate salaries tax, with one being the progressive tax with five marginal tax rates at 2 percent, 6 percent, 10 percent, 14 percent and 17 percent after the bill is passed. The other is the standard 15 percent tax rate.
Taxpayers will use whichever method resulting in them paying less.
Lawmaker Kenneth Leung Kai-cheong of the Professionals Guild said the government should unify the tax calculation and abolish the standard tax rate to cut poverty.
"If the government wants to reallocate resources with tax, they should stick to progressive tax, as only people paying the standard tax rate would be those with high yearly salaries of HK$3 million or more," he said.