Waive property stamp duty, Hong Kong tax professionals urge
Predicting fiscal surplus as high as HK$80 billion this fiscal year, industry professionals also seek deductions for hiring youngsters to spur economy
With sufficient fiscal reserves in the public purse, the Hong Kong government should waive the property stamp duty for first-time home buyers and offer tax deductions for companies hiring young people, a group of local tax professionals has suggested.
In predicting the fiscal surplus would be between HK$70 billion and HK$80 billion in the current financial year, the Taxation Institute – representing more than 2,700 tax professionals – also suggested the city’s tax base be broadened.
In a letter to Financial Secretary Paul Chan Mo-po, the institute said the general public was still finding it difficult to buy their first home despite the government’s introduction of “anti-speculation measures such as [an] increase in ad valorem stamp duty, special stamp duty and buyer’s stamp duty” in recent years amid soaring property prices.
It called for criteria to be adopted for a stamp duty waiver: only buyers or their spouses who did not own any residential properties in Hong Kong would be eligible; a home’s market value could not exceed HK$6 million; and buyers must be permanent residents aged 18 or older.
The buyers would also be required to reside continuously at the property for three years.
The institute further suggested the government grant tax deductions to companies hiring young people aged between 18 and 25.
In addition, it called for band adjustments for salaries tax such that “the majority of taxpayers” would find relief without narrowing the city’s tax base.
At present, the first HK$40,000 of net chargeable income is taxed 2 per cent, and the next HK$40,000 is taxed 7 per cent. The institute suggested that tax bands be HK$50,000 each, expanding the current HK$40,000 amount.
Meanwhile, it suggested the government explore new indirect taxes such as on sales in order to broaden the tax base.
Politicians from both sides of the legislative divide have called on the financial secretary to use the government’s large cash reserves to boost public spending, while ditching the standard practice of keeping outgoings at or below 20 per cent of the city’s gross domestic product.
Democratic Party chairman Wu Chi-wai said on Monday that if the government was willing to spend up to 22 per cent of GDP, the difference in spending could support the economy and boost people’s livelihoods.
In the 2014-2015 fiscal year, the government budgeted 19.8 per cent of the city’s GDP for public expenditure. The outlay rose to 20.4 per cent in 2015-2016 and 21.2 per cent this fiscal year.
Hong Kong’s GDP was HK$2.40 trillion in 2015.
Horace Cheung Kwok-kwan, vice-chairman of the Democratic Alliance for the Betterment and Progress of Hong Kong, said the government had been “too conservative” in its fiscal philosophy.
“Why can’t the government spend more money if it can afford it?” he asked. “It’s investment in Hong Kong’s future.”