The government yesterday set out the handouts, subsidies and rate cuts for households and businesses it is proposing to offset the planned goods and services tax.
It is estimated that the new tax, if imposed across the board at a rate of 5 per cent, will produce $30 billion a year in revenue.
As a sweetener, the standard tax rate could be cut by up to 5 percentage points - to 11 per cent - and the tax bands considerably widened. If the net revenue generated by GST was applied to cutting profits tax, the rate could be lowered by 5 percentage points, to 12.5 per cent.
The details of the consultation, released in a presentation for a special meeting of the Legislative Council's financial affairs panel scheduled for Tuesday, include proposed reductions in vehicle registration tax, wine duty, and taxes on vehicle and jet fuels. A tax on hotel room rentals will be eliminated to avoid double taxation.
There will be no changes to levies on land leases or stamp duty on stock transactions. Stamp duty on commercial property sales or rentals will not change, but a sales tax will be levied on purchases of commercial property. Commercial property rentals will be exempt.
The amount businesses will be allowed to donate tax-free to charities will go up. Companies which voluntarily pay sales tax will be eligible for subsidies on purchases of computer equipment and software. Charities will able to apply to have their sales tax reimbursed.
A tax deferral scheme will be launched for businesses and a programme set up for reimbursing sales tax charged on tourist purchases.