• 100 per cent increase in tobacco duty, consider a tax on non-recyclable plastic products
• Offer a two-tiered e-consumption vouchers with a target disbursement period in the first half of 2023, with HK$2,000 as the base amount for all eligible Hong Kong residents, and an additional HK$6,000 for underprivileged groups (in total HK$8,000)
• Maintain the HK$10,000 tax rebate on salaries tax and increase tax allowances

"However, volatility, uncertainty and inflation pressures weigh on the recovery. We want the government to re-establish Hong Kong on the world stage, while improving public finances."

Building sustainable public finances, promoting a green society

"Following three years of the pandemic, building a healthy and liveable society for Hong Kong residents is a priority. We want measures that create a better living environment," Mr Lau said.

CPA Australia wants the tobacco duty increased to reduce smoking rates and alleviate the burden on public healthcare system. A 100 per cent increase in tobacco duty will generate around HK$8 billion in additional revenue in 2023-24. Further, the government should consider a tax on non-recyclable plastic products to reduce plastic consumption and waste.

"Hong Kong's simple and low tax system is important to attracting companies and investment. We want the government to work with Mainland authorities to enhance the Hong Kong-Mainland of China Double Tax Arrangement (DTA) and help distinguish Hong Kong from regional competitors. This could include reducing the dividend withholding tax rate."

"We want the capital investment entrant scheme reintroduced and eligibility expanded to Chinese nationals. Alternatively, the government could introduce an immigration program that provides residency status to investors making investment in strategic industries."

Encouraging SME transformation

Mr Janssen Chan, Co-Chairperson of CPA Australia's Taxation Committee – Greater China said e-consumption vouchers have helped many SMEs digitally transform in the past two years.

"To build on that momentum, we suggest the government relaunch and increase funding to the Distance Business Program to help more businesses digitalise and expand their online presence.

"Though we need to start moving away from an expansionary approach in the budget, a modified version of the e-consumption voucher scheme could be considered for Hong Kong residents, with a focus on supporting lower-income earners, if the government considers the economic conditions require it.

"Government measures over the past two years have helped many SMEs stay afloat but uncertainty continues. We want measures like the Special 100 per cent SME Financing Guarantee Loan Scheme and the Pre-approved Principal Payment Holiday Scheme extended by one year."

"To address the manpower shortage issue, the government can assist is to improve the chances of younger generations being able to buy a home in Hong Kong by helping with a down payment.

"Given SMEs are particularly struggling to attract and retain talent, the government may consider offering an additional tax deduction on salaries expenditure for companies hiring employees aged 60 or over, which is another pool of top talent." Reducing cost of living pressures, improving living standards, attracting talent

Theresa Chan, Deputy Chairperson of CPA Australia's Taxation Committee – Greater China said Hong Kong residents were facing higher costs, particularly hurting low-income earners.

"To help ease cost pressures we want the HK$10,000 tax rebate on salaries tax maintained. Personal allowance, child allowance and married person's allowances should be increased. The government should also consider increasing the salaries tax allowances at least in line with inflation."

We also recommend an energy bills subsidy to assist with rising prices.

"To prepare for an ageing tsunami and to alleviate the burden on the public health system, we suggest increasing the cap on tax deductions for voluntary contributions to the MPF scheme to HK$100,000 and the Voluntary Health Insurance Scheme (VHIS) to HK$12,000 respectively. For taxpayers who are not policyholders of the VHIS, we suggest introducing a tax deduction on unreimbursed medical and health check expenses from private healthcare providers up to HK$12,000."

"To attract talent to work and stay in Hong Kong, we suggest enhancing the Top Talent Pass Scheme by reducing the salaries tax rate for successful applicants by 50 per cent for the first two tax years, subject to a cap of HK$1.2 million of income."

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References

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