Budget deficit projected to hit $288b

Business | 17 Feb 2021

Eurus Yiu

Hong Kong will have a budget deficit of HK$288 billion for the 2021 financial year, an accounting group said. This compares with Financial Secretary Paul Chan Mo-po's forecast of HK$300 billion.

Stanley Ho, cochairman of tax sub-committee ACCA Hong Kong, said the blooming of the stock market has brought in additional stamp duty income, which offset extra spending due to anti-pandemic measures.

He expects reserves to fall to HK$872 billion from HK$1.16 trillion by next month, equivalent to about 22 months of recurrent expenditure.

Meanwhile, the group proposed a one-off HK$10,000 tax allowance be given to each taxpayer and each dependent, as well as a waiver of the second installment of 2020/21 provisional salaries and profits tax.

Ho added that Hong Kong's tax system has not been reviewed for a long time. Coupled with changes in the international tax environment, he said Hong Kong may need to conduct a comprehensive tax system review to maintain competitiveness and comply with international standards.

However, he emphasized that the setting up of market stamp duty would depend on the situation. As the tax rate is relatively low, Ho said he believed it would not play a major role in the tax system.

Ho said implementation costs could be reduced in view of previous experience if the government decides to implement the cash handout, but added that he believed the payout would not help much in terms of long-term economic development.

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