The latest annual report from the Inland Revenue Department (IRD) shows a decreasing proportion of salaries tax is being shouldered by the highest paid strata of society. The Annual Report for the Year of Assessment 1998-1999, due to be released this week, also shows total revenue from salaries tax dropped by more than HK$4 billion. For the first time the report has included annual income categories of HK$5 million to HK$7.5 million, HK$7.5 million to HK$10 million and HK$10 million and above. The figures show taxpayers from these categories combined to pay almost 5 per cent of the total final salaries tax. Only 999 taxpayers earn more than HK$5 million per year, corresponding to 0.09 per cent of all taxpayers. The numbers are down on the year before, when the top 1,352 taxpayers, all earning more than HK$5 million a year, contributed 6.2 per cent of total salaries tax. The decrease in the amount of tax paid by top earners is a likely reflection of stagnating incomes in Hong Kong during 1998-99. The South China Morning Post reported in December the 1999 pay packet of Hutchison Whampoa group managing director Canning Fok Kin-ning exceeded HK$206 million, making him one of the 227 people to post incomes of more than HK$10 million for the year. Li Ka-shing, chairman of Hutchison and Cheung Kong (Holdings), drew a salary of just HK$55,000 in 1999. The average tax paid by each of the top 227 earners was HK$2.70 million. To compare this with 1997-1998, the average tax paid by those earning more than HK$5 million in 1998-99 works out at HK$1.37 million. There is an increase of almost HK$25,000 per head on 1997-1998, where people earning more than HK$5 million a year paid an average of 1.35 million per head. The total net chargeable income in Hong Kong dropped from HK$237 billion to HK$202 billion, which was reflected in the amount of salary tax paid to the IRD. Only HK$25 billion found its way to the coffers in 1998-99, compared with HK$29 billion in 1997-98. Statistics at the other end of the spectrum show the less well-paid continue to make a negligible effect on total salaries tax revenue. The bottom 10 per cent of earners, with salaries under HK$130,000 per year contributed, just 0.11 per cent of total salaries tax. In 1997-98 the bottom 10 per cent had salaries of under HK$120,000 and contributed 0.08 per cent of total final salary tax. While this appears to indicate the less well-paid are shouldering more of the tax burden, the figures are sufficiently varied to make this conclusion anything but assured. In 1998-99, 80 per cent of taxpayers contributed about 50 per cent of total salaries tax. In 1997-98, the numbers were broadly similar, indicating the spread at the bottom of the earnings barrel had changed little. One conclusion from the figures is 1997-98 stands out as a year where salaries were significantly higher than any other year. The number of people earning more than HK$5 million for that year stands at 1,364. During 1996-97, 907 people earned more than this, and 999 people during 1998-99. Whether 1997-98 will continue as a peak in income remains to be seen.