The government should stop charging companies stamp duty when they buy offices for their own use and instead tax only speculators who resell commercial property quickly, accountancy giant Ernst & Young said yesterday.
The firm's suggestions for this month's budget also include a 75 per cent salary-tax discount, capped at HK$10,000 per taxpayer, and expanding the income bands at which progressively higher rates of salaries tax kick in, from HK$40,000 to HK$48,000.
And Ernst predicts a government surplus of HK$40 billion for the financial year ending next month, meaning financial chief John Tsang Chun-wah's prediction of a deficit would yet again prove false.
The government doubled stamp duty on non-residential property sales a year ago this month, taking the rate to between 1.5 and 8.5 per cent of the price as part of a package of measures to cool the property market. But commercial property is not covered by a special stamp duty of between 10 and 20 per cent levied on homebuyers who sell within three years.
"When a multinational insurance company bought an office in Kowloon recently and paid HK$4.5 billion, the stamp duty alone came to [a reported] HK$400 million," said Tracy Ho Suk-fan, a tax partner at Ernst. "It was also said that Hong Kong's competitiveness was reduced because the [stamp duty] caused a big increase in operating costs."
Ho suggested that speculation could be discouraged by imposing a special stamp duty on the resale of offices.
Ernst tripled its estimated budget surplus from the HK$12 billion it predicted in November, citing a HK$13 billion increase in government land-sale revenue.