Business

Budget Address 2021: tax concession reduced by half

Hong Kong’s Financial Secretary Paul Chan Mo-po on Wednesday announced salaries tax breaks of up to HK$10,000 while raising stamp duties on stock transfers from 0.1% to 0.13%. 

With 1.87 million Hongkongers benefiting from the tax break, government revenue will be reduced by HK$11.4 billion due to the waivers, said Mr Chan. 

Last year’s tax waiver was capped at HK$20,000. 

Meanwhile, the stamp duty increase will be applied to both buyers and sellers. This is the first increase since 1993, provoking complaints from the securities industry. 

After the announcement, Hong Kong Exchanges and Clearing’s share price recorded a 9% drop The Hang Seng Index faced its biggest drop of nearly 3% since May last year. 

Cheung Tsz Wai, a 33 year old Uber driver, said he is disappointed in the budget. “It is no help to citizens like me,” Mr Cheung said. 

“During the pandemic, everyone faced a financial crisis,” Mr Cheung said. “Not only the government did not distribute welfare this year, but they even reduced all kinds of allowance and subsidies.”

Agnes Cheung, director and head of Tax of BDO Limited, said the budget was “as expected” and “shortsighted”.

Ms Cheung said BDO had wanted a tax deduction for rental expenses, but the budget did not address the item this year. 

“There are only “sweeteners” for the property owner from Home Loan Interest Deduction, but nothing for the rental paying group,” said Ms Cheung. “It just focuses on the current year measures, saving expenses, but didn’t take a broader approach to target Hong Kong long term economy growth.”

Webster Ng, president of the Taxation Institute of Hong Kong, said the measures were normal. “Additional revenue from stamp duty will make room for tax relief,” he said. 

“In this year, everybody including the government is suffering, we are all on the same boat,” Mr Ng said.

《The Young Reporter》

The Young Reporter (TYR) started as a newspaper in 1969. Today, it is published across multiple media platforms and updated constantly to bring the latest news and analyses to its readers.

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