Cuts and tax break add up to little relief

PUBLISHED : Thursday, 08 March, 2001, 12:00am
UPDATED : Thursday, 08 March, 2001, 12:00am

Homeowners will enjoy cuts in rates and government rents, but shops and offices will have to pay more in the new financial year thanks to changes in the property market.

The Government has also insisted there should be no cut in salaries tax or increase in tax allowances.

Homeowners will enjoy a further tax break on mortgage repayments. But critics say the rent and rates reduction is so minimal that it will be of no benefit.

Businesses complain the rise in payments will make economic recovery even more difficult.

Mr Tsang defended his policy, saying: 'Even a small increase in the maximum amount of deduction [in tax] would result in a substantial loss of revenue.'

He said recent successive reductions in mortgage interest rates had already reduced the burden on mortgage-payers.

Official figures show the average rateable value of domestic premises dropped by up to seven per cent between October 1, 1999 and October 1 last year, but there was an average increase of up to five per cent for non-domestic properties.

The new government rent for domestic premises will be $164 a month, an average reduction of $8. For non-domestic properties it will be $832 a month, an average increase of $34.

Homeowners will pay a monthly average of $286 in rates, an average saving of $12. For non-domestic premises the rate will be an average of $1,535 a month - $49 more on average than before.

Chinese University of Hong Kong economics professor Kwong Kai-sun said the rent and rates cuts were so minimal that it would not alleviate hardship for families, especially those with negative assets.

Centaline Property Agent senior manager Wong Leung-sing said the 'natural deduction' in rates and rents could provide the Government with an excuse not to lower government payments.

Hong Kong Chamber of Small and Medium Business president Allen Yung Chan-lung complained the retail industry had not picked up, but that shop owners would still be required to pay more rents and rates.

'Although the increase may not involve a large amount of money, it is definitely not good news for the business sector, especially the small and medium-sized enterprises where every dollar counts,' Mr Yung said.

Hong Kong Retail Management Association chairman Yu Pang-chun said he was disappointed the Government refused to cut salary tax or introduce tax rebates to stimulate the economy.

The chairman also complained the increase in rates would hit businesses as it was usually paid by tenants instead of property owners.

The association represents more than 5,000 retail shops in Hong Kong.

But accountancy firm owner Dora Tam felt differently.

Under the new Budget she will pay $2,040 in rates - a rise of just $40 - for the office her company bought last year at a cost of $3 million.

'The rise will be so very small that it will hardly have any influence on us,' Ms Tam said.

Moreover, the bank rate cuts had reduced her monthly mortgage payment by almost $1,000 to less than $23,000 in the last few months, she added.


You may also like