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| Mild budget medicine wins business backing ( 06/03/2003 ) | |||||||||
Mr Leung announced expected tax increases and other measures aimed at restoring a balanced SAR budget by 2006/07, while maintaining Hong Kong's attractions and competitiveness as place for international business. If the Budget is passed by the Legislative Council, corporate profit taxes are to increase by 1.5 percentage points, to 17.5 per cent. Over the next two years, the ceiling on salary taxes is to be lifted to 16 per cent, from 15 per cent. Chairman of the American Chamber of Commerce in Hong Kong Jim Thompson said that the higher tax rates were a step in the right direction, and that Hong Kong people and enterprises had been prepared for an increase. "Even with the corporate tax increases, it is still the lowest tax rate in the region. No-one should be upset about this," said Mr Thompson. Executive director of the British Chamber of Commerce Christopher Hammerbeck said, "Generally, we think it's a courageous and far-sighted budget. The Financial Secretary has clearly listened to the advice from many sectors of the community." The Australian Society of Certified Practising Accountants also said some of the measures, such as giving tax concessions to offshore funds, would help buttress Hong Kong's position as an international finance sector. Director General of Invest Hong Kong Mike Rowse said that the profit tax increase would not deter international business from using Hong Kong. "The most important thing is the opportunity to make a profit, which is very attractive in Hong Kong," said Mr Rowse. The air passenger departure tax will increase from HK$80 to HK$120, from April 1. The Travel Industry Council chairman Joseph Tung said this tax level was similar to that of other destinations in the region. Cathay Pacific Airways chairman James Hughes-Hallett also said that by international standards, this was not uncompetitive. Other Hong Kong business and industry leaders came out in support of what they described as Mr Leung's mild medicine for treating Hong Kong's fiscal malaise. The Financial Secretary said that the principles of "big market, small government" and low taxation would remain the cornerstones of Hong Kong's development. "Investors' confidence in Hong Kong will be enhanced," Mr Leung, added. "People's anxiety about the future will be alleviated when they see that the tax increases and expenditure cuts in the coming years will be mild." "The good news is that Hong Kong is next door to one of the world's most rapidly growing economies and the cost of doing business here has fallen dramatically, enhancing its competitiveness," said Mr Leung. "To stay competitive, Hong Kong must excel in three aspects: quality, creativity and speed. The core industries in Hong Kong, comprising financial services, logistics, tourism and producer and professional services, possess a considerable competitive edge in these three aspects." The real economic growth rate for 2002 was 2.3 per cent, and that for 2003 is forecast to be 3 per cent. Related links: | |||||||||
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