Hong Kong’s tax revenue dropped by HK$18.2 billion in the last financial year, the second straight year of decline, amid slumps on the stock exchange and in the property market.
The Inland Revenue Department (IRD) announced on Thursday that it had collected a provisional sum of HK$342 billion in tax revenue in 2023-24, five per cent less than the HK$360.2 billion in 2022-23.
In the 2021-22 financial year, authorities collected HK$378.5 billion.
Authorities sent out 2.44 million individual tax return forms this year, or 40,000 more than the previous year.
Commissioner of Inland Revenue Tam Tai-pang said he expected an increase in taxpayers and therefore higher revenue this fiscal year given the government’s measures to boost the economy.
“This partly can be attributed to the low unemployment rate or underemployment rate and increase in the salary level of employees,” Tam said.
“There are various schemes operated by the government to attract foreign talent to come to Hong Kong and there are already many such talents having been admitted to Hong Kong,” he added. “So altogether, we would expect that the salaries tax revenue would see an increase of some 10 per cent compared with last year.”
Tam said an expected uptick in the stock and property markets would also swell revenue.
“The property market and stock market last year were not very promising and not satisfactory,” Tam said. “As a result, the stamp duty collections have greatly decreased.”
The scrapping of property market cooling measures announced in February, however, meant the recent stock market sentiment was “quite positive,” he said.
Increase in high earners
The IRD’s figures also showed an increase in the number of taxpayers with an income of over HK$900,000 in the 2022-23 financial year. There were 282,000 people – representing 15.4 per cent of taxpayers – in that income bracket, up from 260,000 the year before.
The number of taxpayers earning HK$200,000 or less fell from 174,000 to 143,000.
Per the government’s announcement during the budget address in February, salaries and profits tax under personal assessment will be reduced by 100 per cent for this financial year, subject to a ceiling of HK$3,000. The cap is half of last year’s HK$6,000.
Hong Kong’s economy grew by 2.7 per cent in the first quarter of 2024 compared to the same period last year, authorities said on Thursday. The growth is down from a 4.3 per cent increase in the fourth quarter of last year.
The city has struggled to revive its economy amid its long post-pandemic road towards full recovery.
Patrick Yeung, the CEO of the Hong Kong General Chamber of Commerce, said the city’s slow recovery should be attributed to the tense geopolitical situation, high interest rates and weak demand globally.
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