Abstract: Tax system in Hong Kong has experienced minimal changes over the past several decades. There exist certain factors that would compromise the fairness of tax burden distribution in its tax system. Such factors as nontax revenue, tax rate structure, standard tax rate, tax credit and financial revenue structure have jointly affected the income redistribution function of Hon Kong tax system. This paper makes use of RSA index and the effective tax rate to test the income redistribution effect of Hong Kong tax system. The results show that Hong Kong’s tax system has certain income redistributive effect and the progressivity of income tax changes slightly with the tax rate variation. The progressivity of the tax system would be greatly improved if the tax exemption policies for capital gains are reduced, the tax rate structure of flat income tax is raised or the standard tax rate is abolished, or the strategy of tax credit is adjusted to make it more targeted.

Key words: tax system in Hong Kong; fair distribution of tax burden; progressivity of tax system; income redistribution effect