Editorial | Hong Kong budget deficits call for a wider tax review
- Regular surpluses appear to be a thing of Hong Kong’s past with worrying factors having a negative impact on public finance
There was a time when the government’s annual budget often ended in a larger than forecast surplus. This enabled the city to embark on major development projects, dish out generous tax sweeteners and pump up enviable fiscal reserves year after year.
But the wheel of fortune has turned in recent years, with bigger than expected deficits eating into the public coffers.
This is partly the result of Covid-relief spending and shrinking revenues amid a prolonged pandemic. But concerns have been raised whether the deficits go beyond cyclical fluctuations.
It is feared that the economic restructuring and the emigration wave may continue to have a negative impact on public finance.
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New growth engines proposed in Hong Kong budget but geopolitics could derail plan, analysts say
Financial Secretary Paul Chan Mo-po conceded that various government revenues were worse than expected over the past financial year. For instance, land revenue was only HK$71.1 billion (US$9.06 billion), much lower than the original estimate by HK$48.9 billion.
