Tax upsurge targets high-income earners in Hong Kong budget
Date
2/29/2024 7:27:17 AM
(MENAFN) In an unexpected move aimed at addressing the territory's budget deficit, Hong Kong authorities have announced plans to raise taxes on high-income earners for the first time in two decades. The proposed tax adjustments introduce a two-tier system set to take effect from April onwards, with income up to 5 million Hong Kong dollars (equivalent to approximately 640,000 US dollars) subjected to a maximum tax rate of 15 percent. Income exceeding this threshold will incur a higher tax rate of 16 percent, as reported by Bloomberg News Agency. This marks a departure from the existing maximum tax rate of 15 percent applicable to all individuals.
Hong Kong's Finance Minister, Paul Chan, outlined the rationale behind the tax increase during his annual budget speech, noting that the measure is expected to impact approximately 12,000 taxpayers, representing around 0.6 percent of the taxpayer population. With the territory grappling with a burgeoning budget deficit, projected to reach 101.6 billion Hong Kong dollars (approximately 13 billion US dollars) by the end of the current fiscal year on March 31, Chan emphasized the need for fiscal prudence and strategic measures to address the fiscal imbalance. Last year's budget deficit surpassed initial estimates, reaching 54.4 billion Hong Kong dollars.
Looking ahead, Chan anticipates a gradual reduction in the deficit, forecasting a decrease to 48.1 billion Hong Kong dollars by the conclusion of the fiscal year ending in March 2025. The finance minister underscored the government's commitment to bolstering public finances and progressively narrowing the fiscal deficit, with the overarching objective of restoring fiscal equilibrium.
The decision to implement tax increases comes amidst challenges stemming from declining land sales and a sluggish economy in Hong Kong, exacerbated by lingering effects of the COVID-19 pandemic. Despite the lifting of travel and other restrictions, economic activity remains subdued, underscoring the urgency of implementing measures to shore up revenues and mitigate the impact of persistent fiscal pressures.
MENAFN29022024000045015682ID1107916716
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.