Government revenues have surged and the budget surplus is expected to considerably exceed the estimate made at the time the 2007/8 budget. Given the huge size of the government reserves and the upbeat outlook for the Hong Kong economy, there is widespread expectation of tax concessions being made when the 2008/9 budget is released on 27 February. Among the rumours (at least the ones relevant to my own circumstances):
1. a reduction in the standard rate (the effective tax rate for high income earners) from 17% to 16%. From my perspective, this would be the most meaningful of concessions. A 1% reduction in my tax rate would be very nice indeed and would be quite meaningful if aggregated over the remaining years to my retirement;
2. an extension of the partial waiver on rates for residential properties. Given that most of our wealth is held in the form of Hong Kong residential property this is a meaningful concession;
3. a rebate of some of the tax paid in for the 2006/7 tax year or provisional tax paid in the 2007/8 tax year. It is also rumoured that the rebate will be deposited into tax payers' MPF accounts rather than paid in cash to avoid fueling an already rising inflation rate. I'd rather have the cash, but even a small addition to my MPF fund is, as Monty Python once said, better than a poke in the eye with a burnt stick.
There will of course be concessions directed at middle income earners (who pay very little tax) and spending initiatives directed at lower income groups (who pay no tax) and special interest groups (who gouge the tax payers). I do not expect to benefit from those concessions. As a side note the already massively overpaid and grossly under worked civil service has already put its snout in the feeding can for a 5% pay rise from the taxpayers.