ACCA Hong Kong (the Association of Chartered Certified Accountants) is pleased to see that the 2014/15 Budget delivered by John Tsang Chun-Wah, Financial Secretary, today addressed key issues related to maintaining prudent management of public finances, and introduced additional measures for the development of key industries.
The overall Budget is forward-looking; however, ACCA Hong Kong had expected the Government to devote more effort and attention to supporting small and medium enterprises (SMEs) and the middle class.
The estimated fiscal surplus for 2013-14 is expected to be HK$12 billion which is largely in line with ACCA Hong Kong’s earlier expectation.
Fergus Wong, Vice Chairman of ACCA Hong Kong, believes that the reduced surplus is due to the slowdown in business activity in the private sector, as a result of fluctuations in the global economy last year. This in turn put a drag on the growth of Government revenue from earnings and profits taxes which were lower than originally estimated.
Wong said: 'We agree with the Government that public expenditure should be maintained at less than 20% of GDP. This is in line with the principle given in the Basic Law to avoid any structural deficit. Constraining public expenditure and balancing the Government’s budget are our top concerns.'
As emphasised in ACCA Hong Kong’s submission to the Government, fostering a business-enabling environment is of great importance. Wong said: 'We appreciate that the Budget introduces seven measures to support local SMEs and to enhance the development of pillar industries. This will ultimately enhance Hong Kong’s competitiveness compared with its neighbours and foster Hong Kong businesses to survive and grow, thus increasing profits tax revenue in the long run.'
Wong added: 'We welcome the proposal for interest deductions in corporate treasury activities. However, it would have been more useful if the Government had provided a concessionary profits tax rate to those group treasury companies to promote Hong Kong as a regional headquarters location, and considered group loss relief and offer a special concessionary tax rate to support SMEs in their start-up stage for enhancing Hong Kong’s business environment, as we have long advocated.'
As proposed in the Budget, middle class families will receive on-going recurring relief measures.
Davy Yun, Chairman, Tax sub-committee of ACCA Hong Kong said: 'We applaud the Government’s move to devote continuous efforts to support the middle class such as increasing the allowance for maintaining dependent parents or grandparents, but the measures do not address the concerns of these middle-income families. We advised that the Government should provide benefits by increasing across-the-board personal allowances such as a deduction for the cost of employing domestic helpers, medical insurance premiums, child allowance and so on, in order to fully ease the financial pressure on the middle class.'
Overall, ACCA Hong Kong welcomes the proposed measures in the Budget that can enhance the business environment in Hong Kong and benefit the community.
Wong said: 'We agree in principle with establishing a 'Future Fund', but a closer look at the operational details is required. We look forward to seeing more concrete measures being implemented by the Government in exploring new business and job opportunities and improving people’s living standards.'