HK's fiscal condition still healthy, says HKICPA
The Hong Kong Institute of Certified Public Accountants on Tuesday said it doesn't believe Hong Kong has an urgent need to introduce any new taxes as the city’s fiscal condition remains healthy despite a surging government deficit. This institute estimated a fiscal deficit of HK$127.3 billion for the 2023/24 financial year, due to a drop in land sales, slower economic growth and lower stamp duty income from the stock and property markets. It said it expects the government to have reserves of around HK$707 billion by the end of March, which is the equivalent of 11 months' worth of expenditure.  The institute's president Roy Leung said that despite the increasing deficit, there's no pressing need for the financial secretary to bring in new taxes or broaden the tax bases in the short term, as the city's overall fiscal condition remains healthy. “When we look at history back in the year of 1998/99 or 2003/04, the deficits amounted to the peak levels, to around seven to eight months of government expenditure. That’s a reference for us to stay in our position that we believe the current financial condition of the government is still healthy,” he told RTHK. “Having said that, I believe it's now the right time to start a holistic discussion or review of the entire tax system because we have to ensure that in the longer term, there’ll be sustainable sources of revenue to feed the need to stimulate Hong Kong’s economy.”  Making proposals for the government's budget, the institute suggested a 50 percent profits tax concession for relevant profits by qualifying regional headquarters to support the “headquarters economy“ raised in last year's policy address. Other proposals included a tax reduction of 100 percent on salaries tax, tax under personal assessment, and profits tax for 2023/24 with a ceiling of HK$12,000, rates concessions for properties for three quarters with a ceiling of HK$1,500, and higher basic personal allowances in line with inflation. To encourage childbirth, the institute suggested the authorities provide a salary tax allowance for those with newborns, and support for companies to allow work-from-home arrangements for staff in the first two years after the birth of a child.