Middle class reap tax benefits while poor miss out

Middle-income families stand to benefit most from the rise in child tax allowance and the rebate on salaries tax announced in the budget - while low-income families gain nothing at all.

The extra help missed out the working poor as those families earning HK$20,000 a month or less fall outside the tax system, according to figures produced by accounting firm KPMG.

Its calculations are based on married couples with one child and ignore Mandatory Provident Fund payments and other tax allowances. Low-income couples were deemed to earn HK$20,000 a month; middle-income couples HK$60,000; and high-income couples HK$200,000.

In the current financial year, a married couple is allowed to earn HK$240,000 tax-free, with a further HK$70,000 tax-free if they have one child.

It leaves middle-income families with a tax bill of HK$57,700, and high-income families with a bill for HK$343,000 - a tax rate of 8 per cent and 14.3 per cent, respectively. In the latest budget, these families also qualify for a HK$20,000 reduction on this year's bills, bringing their tax rates down to 5.2 per cent and 13.5 per cent, respectively.