中文（繁體）
中文（简体）
English
S6 Economics: Hong Kong Tax System and Public Finance (Paper 1: basics)
S6 Economics: Hong Kong Tax System and Public Finance (Paper 1: basics)
This first paper builds four basic ideas: the classification of direct and indirect tax, band by band progressive computation, the comparison between progressive and standard rate tax, and the difference between average and marginal rates.
01 Paper details (check answers afterwards)
| Item | Detail |
|---|---|
| Questions | 10 |
| Suggested time | 20 |
| Difficulty mix | Foundation 3 · Intermediate 3 · Challenge 3 · Error redo 1 |
| Chapter | Chapter: S6 Economics: Hong Kong Tax System and Public Finance |
| Level | S6 Economics |
02 Questions (10 items)
- FoundationWhich of these is a direct tax: salaries tax, stamp duty, tobacco duty or petrol duty?
- FoundationWhat is a progressive tax rate?
- FoundationTaxable income is $120,000. Using bands of 2% on the first $50,000, 7% on the next $50,000, 12% on the third $50,000 and 17% on the rest, what is the tax?
- IntermediateTaxable income is $300,000. At the standard rate of 15%, what is the tax?
- IntermediateFollowing the previous question, progressive tax is $36,000 and standard rate tax is $45,000. How much is actually payable?
- IntermediateFor the same $300,000 case, what is the marginal tax rate?
- ChallengeFor the same case, what is the average tax rate?
- ChallengeWhat is the effect of a tax allowance?
- ChallengeWho pays profits tax?
- Error redoA student treats the average rate of 12% as the marginal rate. What is wrong?
03 Answers and one-line notes
| # | Answer | One-line note |
|---|---|---|
| 1 | Salaries tax | A direct tax is borne by the taxpayer and cannot be shifted to someone else, while stamp duty, tobacco duty and petrol duty are collected on transactions or goods and are indirect taxes. |
| 2 | The rate rises as taxable income rises | Higher income falls into a higher band, so the marginal rate is larger, which is the definition of a progressive rate. |
| 3 | $6,900 | The first 50,000 gives 1,000, the next 50,000 gives 3,500, and the remaining 20,000 at 12% gives 2,400, totalling 6,900. |
| 4 | $45,000 | The standard rate is a flat rate, so 300,000 multiplied by 15% gives 45,000. |
| 5 | $36,000 | Salaries tax is the lower of the progressive total and the standard rate total, so 36,000 is taken. |
| 6 | 17% | The marginal rate is the rate of the last band used, and the top band is 17%. |
| 7 | 12% | The average rate is tax divided by taxable income, and 36,000 out of 300,000 is 12%. |
| 8 | It reduces taxable income | Taxable income is income minus allowances and deductions, so a larger allowance gives a smaller taxable income. |
| 9 | Persons carrying on a trade, profession or business in Hong Kong | Profits tax is charged on business profits while salaries tax is charged on employment income; both are direct taxes but on different subjects. |
| 10 | The marginal rate is 17% | The average rate measures the overall burden while the marginal rate is the top band rate, and the two numbers differ. |
04 What to do after marking
- After marking, redo only the wrong items and write down which step went wrong (formula, unit, or misread number).
- Repeat the same item two days later; move to the next paper only when both attempts are correct.
- Parents only need the answer and note columns; there is no need to explain every item.
Four basics: separate direct from indirect tax, compute progressive tax band by band rather than multiplying all income by the top rate, compare the progressive total with the standard rate total and take the lower one, and remember that the average rate is tax divided by taxable income.Tutor Registration →
Questions and answers are written originally by the TutorZone team and are not taken from any school, publisher or examination authority paper. Every value is checked by computer.