Accountants back new travel levy

By Enoch Yiu
Copyright 2001 South China Morning Post Ltd.
Article date: December 19, 2001
 

The Hong Kong Society of Accountants supports a proposed land and sea departure tax, saying it would help ease the SAR's budget deficit.

But the society says the Government should not impose any other new taxes - or raise existing taxes - until the economy has recovered.

It estimates this year's budget deficit will be between HK$ 50 billion and HK$ 70 billion, mainly due to lower tax income. Tax receipts will fall because the economic downturn has cut into company profits and individual salaries. Tim Lui Tim-leung, chairman of the society's taxation committee, said yesterday he expected the budget would remain in deficit next year to the tune of HK$ 15 billion to HK$ 20 billion.

To help plug the gap, he said, the Government could consider a land and sea departure tax, which travellers would pay when they leave the SAR by car or ferry. The tax was first mentioned in the Budget in 1999.

"We suggested the Government should further consider several options for additional revenue-raising such as a land and sea departure tax," he said.

Large numbers of SAR people travelled to the mainland, and a HK$ 18 departure tax per trip would collect more than HK$ 1 billion for the Government each year, Mr Lui said.

"This tax would cost each traveller only a small amount of money but it would bring good income to the Government," he said.

"We also consider the Government should undertake a critical review of its own costs and keep these under close control."

If the deficit lasted several years, he said, the Government might need to consider the more radical step of a sales tax.

"The sales tax could be an option in the long run, but not in the near term when there is no sign of economic recovery," Mr Lui said.

To avoid adding to the public's burden amid the downturn, the society suggested the Government should not change salary, profit or property tax rates.

But it said the Government should give a wide range of incentives in the areas of fund management, stock transactions, tourism and trade with the mainland.

"Although the budget deficit will be much larger than the original forecast, the society still believes that in the long run tax concessions and incentives may be necessary to continue to attract investment," Mr Lui said.

Among the incentives, it suggested cutting stamp duty on stock transactions to 0.15 per cent from 0.2 per cent.

It also proposed increasing the self-education tax allowance from HK$ 40,000 to HK$ 60,000. The allowance is granted for courses in information technology, logistics, design, film production, and for certain language courses.

Other proposals include:

A profit tax cut of 50 per cent for fund management companies and trustee companies setting up in Hong Kong.

A profit tax deduction of 50 per cent for logistics companies for five years, to help Hong Kong's drive to become a logistics centre.

A profit tax exemption for regional headquarters established in Hong Kong.

The society has presented its proposals to Financial Secretary Antony Leung Kam-chung for the coming Budget.
 

In the News