• Wed
  • Oct 15, 2014
  • Updated: 11:34pm
NewsHong Kong
ECONOMY

Deloitte China forecasts HK$50.3 billion fiscal surplus

Accounting firm Deloitte says a jump in land revenues means government will be flush enough to fund sweeteners in next budget

PUBLISHED : Tuesday, 28 January, 2014, 12:49pm
UPDATED : Wednesday, 29 January, 2014, 3:55am
 

The government will see a HK$50.3 billion surplus by the end of March, largely because of an HK$18 billion increase in land-premium revenues, a leading accounting firm estimated yesterday.

Deloitte's latest prediction was HK$20 billion higher than its estimate in November, when it forecast only a HK$29.9 billion surplus, expecting land-premium revenues to decrease in the second half of the fiscal year.

The accounting firm yesterday called for the administration to offer a series of tax incentives when Financial Secretary John Tsang Chun-wah announces the budget on February 26. They include sweeteners for the middle class, such as waiving 75 per cent of the salaries tax - subject to a HK$12,000 ceiling - as well as stamp duty deductions for those buying a home for the first time.

"First of all, we hope [the government will seek] to develop Hong Kong's economy," said the firm's vice-chairwoman, Yvonne Law Shing Mo-han.

"We also [want] support for needy and middle-class families and salary taxpayers."

Apart from tax waivers, the firm also proposed raising the basic tax allowance from HK$120,000 to HK$126,000, as well as increasing child and dependent-parent allowances by about 10 per cent, to HK$77,000 and HK$42,000, respectively.

To ease the burden on homeowners and tenants, the firm suggested that besides tax deductions for mortgage-loan interest, homebuyers should also be able to a claim a deduction for the mortgage principal, capped at HK$100,000 a year with a limit of 20 years.

First-time local buyers should be allowed a deduction for the stamp duty paid on the purchase, also with a HK$100,000 cap.

"We don't have a scientific definition of 'middle class', but generally we have heard residents saying that they have been spending a lot on housing matters, so we believe that the budget should target them and help them," said Davy Yun, a tax partner at Deloitte.

To boost the city's business competitiveness, Deloitte suggested lowering the profits tax rate from 16.5 per cent to 16 per cent, introducing a corporate allowance of HK$200,000 for limited companies, and additional tax incentives for new regional headquarters, to encourage foreign firms to set up their base in Hong Kong.

Deloitte said it believed that developing the economy would help increase the government's tax revenue in the long run, and if its recommendations were implemented by the finance chief, the government could still see a budget surplus of HK$43 billion in the next financial year, which starts in April.

Earlier this month, the Taxation Institute, which represents 2,700 taxation professionals, estimated a government budget surplus for this fiscal year of HK$20 billion.

 

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This article is now closed to comments

22gt7
For the last 4 years, salaries taxpayers have been allowed the waiving of 75 per cent of the salaries tax, subject to a HK$12,000 ceiling. Why does not the Government incorporate these into the sliding tax rate scale (in the wording of the Ordinance...for the year of assessment 2013/14 and for each year after that year) in Schedule 2 of Inland Revenue Ordinance (Cap 112) instead of the piecemeal so-called sweeteners to middle class each year?
John Adams
Philip Bowring on 26 January :
"The worst senior appointment made by Chief Executive Leung Chun-ying was the retention of John Tsang Chun-wah as financial secretary.
n his first five years in the job, Tsang exhibited widely inaccurate budget forecasts and, worse, presided over a series of mini-measures and one-off handouts of cash, rate rebates and the like that exacerbated the imbalances in the fiscal system."
Enough said: duffer is DUFFER
Camel
Why not using the surplus to improve education, social welfare and the health care? (after reducing the tax for the middle class).
johnyuan
A foreign private accounting firm makes an estimate and says John Tsang probably got his maths wrong again that a surplus and not deficit is in the pipeline. The Deloitte put the figures together and attributed then surplus mostly comes from the property tax. I made a suggestion weeks ago that that is where the figures should lie. It is no rocket science that even a foreign private accounting firm can do it, John Tsang an official yet can’t do the same to get the figures estimated correctly. We must put him on trail if we can and interrogate him why he has been playing such a deception game year after year even when the public makes a mockery of his ability as a Financial Secretary. Why put the public through a yoyo accounting in sacrificing his credibility? Is he also underestimating the intelligence of the public by springing surprise of a big surplus but so unnecessary and meaningless?
.
But this time his estimate is a forecast of a deficit announced in the context of opposing social assistance to the poor as proposed by the Chief Executive. If Deloitte turns out Tsang are wrong, it is a big offense and no longer a little private game he has been playing. It calls for an inquisition to fathom out once for all and ask if he is being instructed to fool Hong Kong public year after year with his fabrications. After that, fire him immediately and take away his pension.
anthonygmail
If John Tsang had his salary linked to the accuracy (or lack of) of his forecasts, then his salary would probably be lower than mine.
.
More seriously, just because we are having surpluses does not mean that we should tax less. The tax rates in HK are already very low and adjusting the rates/allowances here and there will not have any significant effect on HK's competitiveness or the middle classes' burden.
.
Instead, the government should spend more to make HK a better place to live/work or do business.
John Adams
Let's see who is right this year : Deloitte China or the FS duffer.
.

PS Don't leave it to the last hour to let the duffer revise his estimate !
(That would be cheating)
chuchu59
Should Monsieur TSANG(he watches French films) be allowed to revise his estimates he still going to be widely off the mark.
chuchu59
If it turns out as Deloitte says TSANG needs to account for why he is so wide off the mark. What did he base his forecast on and what has changed to justify the huge discrepancy? You cant do that every year. Get the budget wrong by tens of billions then act smugly just because that will mean more money in the public coffers. Every now and then crying wolf by saying we shall be bankrupt one day. Stop the **** and do something Mr. FS. Its your duty to balance the books. What have you done?
daily
Has Tsang ever even come close to his budget forecasts?......................this guy is probably the least qualified person in HK to do the FS job ..........all he ever wants to do is to predict things on the negative side and kiss Donald Tsang's butttt...............Other than that, I can't think of one good or decent thing John Tsang has done during his FS time.
Not to mention the guy still keeps a hairstyle from the 80's or earlier.............he is living in the stone ages man............get a life.
 
 
 
 
 

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