A Deloitte logo is pictured on a sign outside the company's offices in London on Sept 25, 2017. (DANIEL LEAL-OLIVAS / AFP)
Amid loud calls for the Hong Kong government to deploy its massive fiscal reserves to improve people’s livelihoods, accounting and business advisory firm Deloitte recommends authorities apply tax-reduction and tax-relief measures.
Deloitte proposes making mortgage repayments (both capital and interest) as well as rental expenses for salary earners’ principal place of residence tax deductible, with a ceiling of HK$100,000 and lasting 20 years.
Advisory firm suggests making capital and interest payments on mortgages deductible from salaries tax
It also sought waiving of 75 percent of final tax payable under the Salaries Tax and Personal Assessment in the 2017/18 financial year, subject to a HK$30,000 ceiling.
The government should also add new allowances and deductible items or increase allowable amounts to ease taxpayers’ financial burdens, Deloitte argues. A deduction for elderly residential care expenses could be claimed along with dependent parent-grandparent allowance, for example.
The company also wants the government to widen marginal bands for salaries tax from the current HK$40,000 to HK$45,000 with effect from the 2017/18 financial year.
The Hong Kong government last month revealed its cumulative surplus stood at HK$110.6 billion as of December – well above its original forecast of HK$16.3 billion. Major accounting firms and auditing bodies estimate the final figure could be as high as HK$180 billion, more than 10 times the administration’s original projection.
Fiscal reserves had already swollen to HK$1.06 trillion by December last year and could balloon further to HK$1.13 trillion by the end of next month.
Financial Secretary Paul Chan Mo-po will announce the 2018-19 Budget on February 28.