An accountancy body has called for tax deductions for voluntary mandatory provident fund contributions to be raised to 15 percent of assessable income, or HK$180,000 per annum. The recommendation by Certified Public Accountants Australia follows a survey of 136 of its members on key tax issues. Existing contributions are made at a 5 percent rate, with assessable income capped at HK$30,000 a month.
More than 50 percent of respondents think the existing tax base is very narrow, with 51 percent saying Hong Kong relies too much on land revenue, while 28 percent think the tax system is inadequate to meet social needs.
More than 80 percent supported a comprehensive tax review and a reform of the tax system to ensure the SAR's future growth and prosperity.
"A review of the tax system would help identify reforms to meet the financial demands caused by the aging population and ensure Hong Kong's international competitiveness," said the body's Greater China taxation committee chairwoman Loretta Shuen Leung Lai-sheung.
With regards to salaries tax, 41 percent would like to see increases in both the child and dependent parent allowance, and nearly 48 percent want to see future increases in personal allowances linked to the level of inflation.
CPA Australia expects a HK$55 billion surplus in the upcoming budget.
"Hong Kong will be facing challenges, including an aging population and competition from neighboring countries," Shuen said.
"The government should take immediate action to conduct a review of the tax system to ensure long-term financial sustainability through a broadened tax base," she added.
Asked what new tax measures they would like to see, 45.6 percent opted for a tax on luxury goods, 32 percent chose progressive profits tax rates and 28.7 percent wanted a capital gains tax.
Around 43 percent ranked Singapore tops in terms of a competitive tax system, up nearly 6 percent from last year. Hong Kong is down 2 percent to 30.2 percent. As for property, 40 percent believe the government should implement new measures. STAFF REPORTER
The Standard, Hong Kong
6th February 2015