Broad base makes rates rise an attractive option
A one percentage point increase in property rates could raise an extra $2.9 billion a year and has the advantage of already being broadly based, the committee head said.
Increasing property rates was not one of the options raised by the committee in its consultation paper released in August.
'However, we have received views during the consultation period that it could be one of the options to raise revenue as the base of the rates is quite broad already,' Mr Cheng said. While admitting Hong Kong was more reliant on property tax than other countries of the Organisation for Economic Co-operation and Development, the committee said rates provided a source of revenue that was less affected by cyclical movements in business profits.
'Rates are very much broader based than either profits tax or salaries tax because they are payable in respect of all rateable properties without regard to business profits or entitlements to personal allowances.'
Property rates account for 24 per cent of Hong Kong's total tax revenue compared with five to 10 per cent in other OECD countries. At present there are 1.99 million rating assessments comprising nearly 2.71 million properties. Rates are charged at five per cent of rateable value.