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S6 Economics: Hong Kong Tax System and Public Finance (Paper 4: mistake clinic)
S6 Economics: Hong Kong Tax System and Public Finance (Paper 4: mistake clinic)
This last paper revisits the three high frequency errors of the chapter: taxing all income at the top rate, forgetting the standard rate comparison, and mistaking the average rate for the marginal rate.
Direct answers Spend three seconds checking those three points after every question, which works better than rereading the notes.
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)
- FoundationTaxable income is $250,000. Compute the tax using the bands.
- FoundationFollowing the previous question, standard rate tax is $37,500. How much is payable?
- FoundationFor the same case, what is the average tax rate?
- IntermediateWhy is the average rate of 11% below the marginal rate of 17% in this case?
- IntermediateHow do allowances differ from deductions?
- IntermediateName a regressive tax and explain why it is regressive.
- ChallengeWhat are the two main sources of Hong Kong government revenue?
- ChallengeA deficit of $70 billion is reduced by cutting expenditure by $20 billion with revenue unchanged. What is the new deficit?
- ChallengeTax revenue at about 10.7% of GDP means what?
- Error redoA student multiplies taxable income of $300,000 by 17% to get $51,000. What is wrong?
03 Answers and one-line notes
| # | Answer | One-line note |
|---|---|---|
| 1 | $27,500 | The first three bands give 10,500 and the remaining 100,000 at 17% gives 17,000, totalling 27,500. |
| 2 | $27,500 | The lower of the two is taken, and 27,500 is below 37,500, so 27,500 is paid. |
| 3 | 11% | 27,500 out of 250,000 is 11%, which is the overall burden. |
| 4 | Because the earlier income was taxed at only 2% to 12% | The marginal rate looks only at the last band while the average rate blends all bands, so it must be lower. |
| 5 | An allowance is a fixed amount for a situation, a deduction is a specified item of actual spending | A child allowance is a fixed amount, while mandatory provident fund contributions and home loan interest are deductions, and both reduce taxable income. |
| 6 | Tobacco, alcohol or petrol duty, because low income earners spend a larger share of income on it | The duty is a fixed amount per unit of goods, so the lower the income the larger the share of income it takes. |
| 7 | Tax revenue and land premium revenue | Tax revenue covers profits tax, salaries tax and stamp duty, while land revenue comes from land sales and lease modifications and is more volatile. |
| 8 | A deficit of $50 billion | A deficit is expenditure minus revenue, so cutting spending by 20 billion narrows the deficit from 70 to 50 billion. |
| 9 | The resources the government raises through tax are about one tenth of the economy | The ratio shows the tax burden relative to the size of the economy, and a lower ratio means the government directly absorbs a smaller share. |
| 10 | The correct answer is $36,000 because only the last band uses 17% | Progressive tax is computed band by band: the first three bands give 10,500 and the remaining 100,000 at 17% gives 17,000, totalling 36,000. |
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.
Use three columns in the error log: question, cause, corrected steps. The three commonest causes here are taxing all income at the top rate, forgetting the comparison with the standard rate, and mistaking the average rate for the marginal rate.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.