Paying taxes is fun!

Letter from Hongkong

It’s that time of the year in Hong Kong when the taxman comes calling. But unlike in India, where the process of filing tax returns is Saral only in name, in Hong Kong it’s such a breeze that paying taxes is practically a pleasurable activity. Straight off, the peak salaries tax rate is only 17% (as opposed to 30% in India, not counting a 2% education cess), so ‘giving unto the taxman the things that are the taxman’s’ isn’t such a huge wrench for salaried middle-class folks. But, equally important, the ease of operations when you actually do the paperwork is enough to make you delirious with joy.

In India, typically, it’s the rare man who can navigate the Saral tax return form (that name is the surest sign that taxmen have a sense of humour) without tripping on Section 80CCC or 88. In Hong Kong, on the other hand, I can fill out a one-page online form to compute my tax liability, pay my taxes online, and file my tax return – without forking out fees to a tax practitioner to navigate the tax maze, or even stirring out of my house. It’s all really yung yi (Cantonese for ‘easy’, or Saral).

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If all this sounds good, it gets even better, as a double-income NRI couple discovered last year. Having paid their respective salaries tax and filed their returns, they reckoned they’d delivered on their responsibilities as honest tax-paying residents. They were therefore puzzled to receive a letter from the Inland Revenue Department weeks later: fearful that it might contain some penal notice for wrongful declaration of income or some such fiduciary lapse, they opened it gingerly. Out tumbled a cheque for a not-insubstantial amount, and an explanation: evidently, if they had opted for joint assessment (as a couple), they would have paid less tax. The tax officials had therefore suo motu refunded the ‘excess tax’ paid.

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Hong Kong’s tax base is rather narrow, and as part of an effort to broaden it, the administration last year initiated a proposal to levy a goods and service tax (GST), a sort of a sales tax on all purchases. Financial Secretary Henry Tang even held out the tantalising possibility of lower salaries tax rates if the proposal went through. But critics denounced it as a perverse move that would effectively take money away from the poor and put it in the hands of the rich. The tourism industry too felt that a GST would take away the allure of one of Hong Kong’s top draws: the shopping experience. Faced with such vociferous opposition, the government quietly buried the proposal late last year.