15 per cent stamp duty
To rein in the city's runaway housing prices, Hong Kong's Financial Secretary John Tsang Chun-wah announced an additional 15 per cent stamp duty on non-permanent-resident and corporate buyers starting from October 27, 2012. The move prompted speculation over the effectiveness of taxation on the real estate market and criticisms that Hong Kong was turning away from its roots as a free market economy in favour of a more protectionist market environment.
New stamp duties 'no big blow' to government revenue: forecast
An accounting institute has predicted that government revenue will not be badly hit by the two new stamp duties introduced late last year, forecasting instead a budget surplus of HK$25.6 billion for the 2012-13 financial year.
"The special stamp duty is mainly to crack down on property speculation while the buyer's stamp duty primarily affects non-local buyers," said Florence Chan Yuen-fan, chairwoman of the Hong Kong Institute of Certified Public Accountants' taxation faculty executive committee.
"Many Hongkongers still want to buy homes. I think the new duties will not deal a big blow to the government's revenue [from stamp duties]."
Chan's comment comes on the back of concerns about the levies' cooling effect on the property market after they took effect on October 27 last year.
Under the buyer's stamp duty, non-permanent residents and corporate buyers must pay an additional 15 per cent duty on home prices, regardless of their holding period.
Under the special stamp duty increased since last October, both buyers and sellers must pay an additional 20 per cent duty on deals within six months of the original purchase.
But despite the new levies, the institute expects the 2012-13 stamp duty revenue to hit HK$44 billion - HK$7 billion more than the government forecast.
It also forecasts a budget surplus of HK$25.6 billion - a huge difference from the government's own forecast last February of a HK$3.4 billion deficit.
In view of its forecasts, it urged the government to offer taxpayers and small- and medium-sized enterprises more tax relief.
It proposed tax deductions for voluntary Mandatory Provident Fund contributions with an annual cap of HK$60,000, and a tax rate reduction for corporate profits from 16.5 per cent to 15 per cent for companies whose gross income does not exceed HK$2 million a year, among others.
Financial Secretary John Tsang Chun-wah will review his forecasts in his budget speech next month.