Revenue

In 2007, the Hong Kong economy registered a strong growth. IRD in 2007-08 broke its record once again. The prospering economy brought about a significant growth in business profits and a general increase in salary income. The stock market was particularly active and the property market was gradually blooming. Earnings and profits tax collections and stamp duty collections surged by $18.4 billion and $26.5 billion respectively, representing an increase of 16% and 106% compared with the previous year (Figure 1, Schedules 1 and 2).

Figure 1   Revenue collected by tax type
  Type of tax 2004-05
($m)		   2005-06
($m)		   2006-07
($m)		   2007-08
($m)		  
  Profits tax –                
 
  Corporations
52,562.2   65,586.1   65,499.6   86,775.6  
 
  Unincorporated businesses
6,077.5   4,210.4   6,419.4   4,647.1  
  Salaries tax 33,990.5   37,493.9   38,585.6   37,479.5  
  Property tax 1,115.6   1,267.1   1,247.4   1,240.6  
  Personal assessment 2,963.4   3,193.9   3,565.6   3,586.6  
  Total earnings & profits tax 96,709.2   111,751.4   115,317.6   133,729.4  
  Estate duty 1,468.4   1,675.7   777.7   353.4  
  Stamp duty 15,851.4   17,867.2   25,076.6   51,549.1  
  Betting duty 12,057.2   11,938.1   12,047.4   13,048.4  
  Business registration fees 1,348.7   1,478.8   1,497.9   1,565.8  
  Hotel accommodation tax 247.4   310.0   384.2   450.4  
  Total revenue collected
127,682.3
 
145,021.2
 
155,101.4
 
200,696.5
 
  % change over previous year 20.2%   13.6%   7.0%   29.4%  

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The revenue collected by the Department during 2007-08 is close to 65.5% of the Government General Revenue (Figure 2). This represents an increase of $45.6 billion or 29.4%, from that collected in the previous year. Profits tax contributed the largest part of the total revenue collected. The stamp duty collection recorded a significant growth of more than 100% and became the second largest type of revenue collected. The revenue collected from profits tax and stamp duty accounted for 71.3% of total revenue collected (Figure 3).

Figure 2   Government General Revenue
This is a bar-chart showing Government General Revenue for 2004-05 to 2007-08. The figures are as follows: 2004-05 is $230 billion, including 55.6% from IRD collections, 2005-06 is $205 billion, including 70.7% from IRD collections, 2006-07 is $229 billion, including 67.7% from IRD collections, 2007-08 is $306 billion, including 65.5% from IRD collections.

Figure 3   Composition of the revenue collection
This is a pie-chart showing percentage composition of the IRD collections in 2007-08. The figures are as follows: 45.6% from Profits Tax, 18.7% from Salaries Tax, 25.7% from Stamp Duty, 6.5% from Betting Duty, 3.5% from Others.

Figure 4   Cost of collection
This is a line-chart showing cost of collection for 2004-05 to 2007-08. The figures are as follows: 2004-05 is 0.86%, 2005-06 is 0.74%, 2006-07 is 0.69%, 2007-08 is 0.58%.

With material productivity savings and an increase in revenue collections during the year, the cost of collection of revenue decreased from 0.69% to 0.58%(Figure 4).

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