Good economy expected to boost income tax take
The robust economy is expected to boost government receipts of salaries and profit tax this financial year by almost $4 billion compared with the previous year.
Inland Revenue Commissioner Alice Lau Mak Yee-ming said the economic turnaround was projected to translate into a 3 per cent rise in salaries-tax receipts in 2005-06, or about $1.02 billion. The government reaped just under $34 billion from individual taxpayers in 2004-05 and a 3 per cent improvement will raise this figure to just over $35 billion.
Profit tax from corporations totalled about $52.56 billion in 2004-05, while unincorporated businesses paid more than $6 billion. Ms Lau is expecting these receipts to rise by 5 per cent this financial year, to $55.19 billion and $6.38 billion respectively. This means an extra $2.93 billion in government coffers, not just because of a sound economy but also due to the 1 per cent increase in profits tax introduced in the last financial year.
Together, they are projected to increase 2005-06 tax receipts by more than $3.95 billion.
Ms Lau said about 1.2 million tax forms were sent out in May and that she was satisfied with the speed of response.
On provisional taxes, she said individuals only had the right to pay less if their income had declined by at least 10 per cent year on year. If their wages had risen or the decrease was under 10 per cent, they would be liable for provisional tax.