HONG KONG, famed as a low-tax, high-income haven, will increase tax on high earners in a bid to bring down its deficit.

A two-tier tax system will be introduced from April, with income of up to HK$5 million (US$640,000) taxed at 15%, and anything higher than that being taxed at 16%. Previously tax for all individuals was capped at 15%.

The move will affect about 12,000 people, or about 0.6% of taxpayers, Financial Secretary Paul Chan said.

Hong Kong is looking at ways to plug the hole in its budget, with the deficit for the year ending March 31 projected at HK$101.6 billion, almost double the estimate initially laid out a year ago.

The move will bring in about HK$910 million in additional revenue each year, Chan said, adding that the new tax rate will still be lower than in other advanced economies. (SD-Agencies)