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President, in my capacity as the Chairman of the Bills Committee on the Inland Revenue (Amendment) (No. 2) Bill 2015 (the Bills Committee), I submit the Bills Committee’s report to the Legislative Council and report on the main deliberations of the Bills Committee.
The Inland Revenue (Amendment) (No. 2) Bill 2015 (the Bill) seeks to amend the Inland Revenue Ordinance (IRO) to give effect to the proposals concerning tax concessions in the 2015-2016 Budget (the Budget), that is:
(1) increase both the child allowance and the additional one-off child allowance in the year of birth for each eligible child from $70,000 to $100,000 under salaries tax and tax under personal assessment with effect from the year of assessment 2015-2016; and reduce salaries tax, tax under personal assessment and profits tax for the year of assessment 2014-2015 by 75%, subject to a ceiling of $20,000 per case.
The Administration. The Bills Committee notes that the proposed increases in child allowance and additional one-off child allowance will benefit about 370 000 taxpayers, and the revenue forgone is estimated to be about $2 billion a year. As regards the proposed one-off reduction of salaries tax and tax under personal Bills Committee has held one meeting to deliberate with the assessment for the year of assessment 2014-2015, about 1.2 million taxpayers will be benefited, whereas the proposed one-off reduction of profits tax will benefit about 130 000 tax-paying corporations and unincorporated businesses. The revenue foregone for 2015-2016 is about $17.7 billion.
The Bills Committee also notes that the eligibility for claiming the child allowance is contained in section 31(1) of the IRO.
Details of the deliberations of the Bills Committee are set out in the written report. The Bills Committee will not propose Committee stage amendments to the Bill, and will support the resumption of the Second Reading debate on the Bill.
President, the following is my personal view on the Bill. The Business and Professionals Alliance for Hong Kong (BPA) welcomes the tax concessions proposed in this year’s Budget. In the past, the Government has always resorted to offering tax rebate or tax concessions to relieve the financial pressure of taxpayers when there is a surplus for the Treasury. In February 2015, the estimated revenue announced in the Budget was almost 10 percentage point higher than the former estimation, thus giving the Government a much bigger surplus for this financial year. Among all revenues, those from stamp duty, profits tax and salaries tax all exceed the original estimation. Given a handsome surplus, returning wealth to the people by way of a reduction in salaries tax, personal income tax and profits tax can help ease the financial burden of the middle-class families and respond to our call for reducing some of the profits tax of the small and medium enterprises (SMEs).
The birth rate in Hong Kong has remained low for a long time, and many people attribute this to the heavy burden of child-raising. Thus, years ago, the BPA has begun to ask the Government to increase the child allowance to lessen the tax burden of parents. Although an increase in the allowance may not lure young couples to change their decision of whether or not to have children or the number of children they would like to have, an increase can actually ease the tax burden of those who are parents, in particular the middle-class families. Last year, we meant to propose an increase in the child allowance from $70,000 to $80,000 to the Financial Secretary. Yet, we are very happy to see that the Financial Secretary is more proactive and has raised the allowance to $100,000. The Inland Revenue Department will be issuing the tax returns in August. I wish that this Bill can be passed by the Council expeditiously and smoothly, so that taxpayers and SMEs throughout Hong Kong can be benefited.
President, I so submit.