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Reducing Tax Burdens on Individuals
184. We are working towards the implementation of the two-tiered profits tax rates system. To alleviate the tax burden on salary earners, I propose to implement the following measures starting from the year of assessment 2018-19:
| (a) |
widening the tax bands for salaries tax from the current $45,000 to $50,000, increasing the number of tax bands from four to five, and adjusting the marginal tax rates to 2 per cent, 6 per cent, 10 per cent, 14 per cent and 17 per cent respectively. These measures will reduce the tax burden of 1.34 million taxpayers and reduce tax revenue by $4.09 billion a year; |
| (b) |
increasing the basic and additional child allowances from the current $100,000 to $120,000. This will benefit 335 000 taxpayers and reduce tax revenue by $1.31 billion a year; |
| (c) |
increasing the allowances for maintaining a dependent parent or grandparent. This will benefit about 607 000 taxpayers and reduce tax revenue by about $580 million a year. I will make the following three adjustments: |
| ▷ | increasing the allowance for maintaining a dependent parent or grandparent aged 60 or above from the current $46,000 to $50,000. The same increase applies to the additional allowance for taxpayers residing with parents or grandparents continuously throughout the year; |
| ▷ | increasing the allowance for maintaining a dependent parent or grandparent aged between 55 and 59 from the current $23,000 to $25,000. The same increase applies to the additional allowance for taxpayers residing with parents or grandparents continuously throughout the year; and |
| ▷ | raising the deduction ceiling for elderly residential care expenses from the current $92,000 to $100,000 for taxpayers whose parents or grandparents are admitted to residential care homes. |
| (d) |
introducing a personal disability allowance for eligible taxpayers, at a rate on par with the current disabled dependent allowance of $75,000. This will reduce tax revenue by about $450 million a year. |
185. As for the proposed tax deduction for the premium of the Voluntary Health Insurance Scheme mentioned earlier, it will reduce tax revenue by around $800 million a year. Subject to the passage of the relevant legislative amendments by the LegCo, I hope that the measure will be implemented from the following year of assessment.
186. At present, if both husband and wife have income assessable to tax and wish to elect for personal assessment, they must jointly make an election. I propose to relax this requirement starting from the year of assessment 2018-19 by allowing the husband and wife the option to decide whether to elect for personal assessment, thereby providing greater flexibility to taxpayers. The relaxation will entail amendments to the Inland Revenue Ordinance.
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