EY- Hong Kong 2014-15 Budget Insights

Hong Kong 2014-15 Budget Insights

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In presenting his 2014-15 budget Mr. John Tsang urged Hong Kong to believe in opportunity, not fate.

Overall, in his 2014-15 budget the Financial Secretary appears to have adopted an approach of “if it ain’t broke, don’t fix it” whilst outlining how the system might in future get “broke” if public expenditure is not closely monitored and breaches the figure of 20% of GDP.

Whilst following through on his pre-budget comments to reduce the annual “sweeteners”, Mr. Tsang will no doubt hope that middle class callers to his annual post–budget phone-ins will at least give him some credit for the “sweeteners” he has proposed for 2014-15 and concur with his belief in “opportunity not fate”.

We hope that the proposals suggested in this budget, including the building of a “metropolis” on an artificial island between Central and Lantau, will indeed lead to “opportunities” and not suffer the “fate” of the lost city of Atlantis which sank beneath the waves.

A Highlights

  • Reduce profits tax, salaries tax and tax under personal assessment for 2013-14 by 75%, capped at $10,000
  • Increase dependent parents/grandparents allowance from $38,000 to $40,000 (for those aged 60 or above) and from $19,000 to $20,000 for those aged 55-59; the additional parents/grandparents allowance will also be increased in the above amounts respectively for taxpayers living together with their parents/ grandparents
  • Raise the deduction ceiling for elderly residential care expenses from $76,000 to $80,000
  • Waive stamp duty on the trading of all exchange traded funds
  • Extend the first registration tax exemption for electric vehicles by three years to 31 March 2017
  • Increase the duty on cigarettes by 20 cents per stick with immediate effect
  • Waive rates for the first two quarters of 2014-15, subject to a ceiling of $1,500 per quarter for each rateable property
  • Pay one month’s rent for public housing tenants
  • Provide one additional month of Comprehensive Social Security Assistance payment, Old Age Allowance, Old Age Living Allowance and Disability Allowance
  • Issue “inflation-linked retail bond” (iBond) worth up to $10 billion

Our Budget Insights summarizes the key proposals contained in the budget and our views thereof.