Pressure mounts for tax reductions
Pressure for tax cuts is growing, with the government yesterday reporting a budget surplus of HK$47.6 billion for last year after including other funds and assets.
The new figure, under the so-called accrual-based accounting system, compares with the HK$14 billion announced by the financial secretary in his budget using a cash-based method.
The annual budget in February focuses on revenue and spending for the year while accrual accounting includes the Exchange Fund, the Housing Authority, railway businesses, pensions, assets and debts.
Figures show government assets totalled HK$910.7 billion by March this year, up from HK$861.8 billion in 2005.
Democratic Party vice-chairman and economic affairs spokesman Sin Chung-kai said the new surplus figures would fuel pressure for tax cuts in the next budget.
If a consensus on this could be reached with other political parties he hoped it would mount stronger pressure on Financial Secretary Henry Tang Ying-yen for cuts.
'I believe the government will end up with a surplus close to HK$40 billion for this financial year. I believe the government will at least offer modest reductions,' he said. Mr Tang has warned that parties' demands for salaries tax to be restored to the 2002-03 level would mean a higher allowance and narrower tax base.
The parties have called on the government to restore the basic salaries tax allowance to $108,000 from $100,000, the level in 2002-03 and for the tax band to be widened from $30,000 to $35,000.
Mr Tang has said calls for a return to the standard rate of 15 per cent in 2002-03 and for raising the tax threshold were 'simple slogans'. In February, Mr Tang estimated in his budget speech that shaving one point off the standard rate and raising the threshold would cost the government HK$7 billion and take nearly 100,000 people out of the tax net.
Mr Sin said the financial secretary should at least adjust the tax rate and tax band. The government would also be in a much better position to spend more to help the underprivileged, he said.
A government spokesman said accrual-based accounts differed from cash-based ones in the purpose they served. Accrual-based accounts showed financial performance while the cash accounts demonstrate that public money had been paid within the limits approved by the Legislative Council.