Financial Secretary Calls for Confidence Amid Over HK$100 Billion Deficit

The Hong Kong government faces over HK$100 billion in financial deficit for the second consecutive year. The financial budget released on February 28th indicates an expectation to return to surplus within four years. 

During the news conference, Financial Secretary Paul Chan highlighted that last year’s economic “triple engines” for Hong Kong were exports, private consumption, and investment. 

A significant policy shift announced is the government’s decision to abolish the 13-year-long measures aimed at curbing rapid housing price growth. With this change, all residential property transactions will no longer incur additional stamp duties, including Buyer’s Stamp Duty and New Residential Stamp Duty. 

Residential property prices in Hong Kong fell by 7% last year, with transaction volumes shrinking to 43,000, a 5% decrease in trading activity. Given the market’s downturn, Chan stated that these measures are no longer necessary. 

The Hong Kong government later clarified that, after the full withdrawal of the “spicy measures,” it would continue to monitor the market dynamically and introduce appropriate measures as needed. However, they do not anticipate a surge in speculative trading or any immediate objective indicators to stimulate transactions.  

Focusing on local consumption, Chan mentioned the government would prioritize tourism development, noting a 21% increase in tourist numbers following the full border reopening. 

“Changes in consumption habits among tourists and residents have been observed,” said Chan.  

“We need to enhance our product and service offerings to encourage tourists to spend,” he said. “High-spending tourists will help boost the economy in relevant sectors like retail and dining.”

On January 1, 2024, many mainland tourists visited Victoria Harbor for the fireworks display and experienced delays returning to the mainland via border checkpoints and Sheung Shui. Tourists expressed concerns on social media about the high costs of overnight stays in Hong Kong. 

Following the full border reopening in 2023, a significant number of Hong Kong residents travelled to the mainland for tourism, shopping, and consumption, exacerbating the situation for Hong Kong’s retail and dining sectors post-pandemic. 

The new budget continues to offer financial sweeteners, though on a smaller scale than in previous years, totalling approximately HK$11.5 billion. 

The three-year electronic consumption voucher scheme will not continue, nor will there be subsidies for electricity bills or coverage of the Diploma of Secondary Education examination fees as in the past. 

The government will maintain tax rebates for taxpayers, offering a 100% reduction in salaries tax and personal income tax for the 2023/24 assessment year, as well as profits tax. However, the maximum rebate will be halved from the previous budget’s HK$6,000 to HK$3,000. 

Written by Jack Deng:  

Graduate student in Journalism at The University of Hong Kong, with an undergraduate background in Journalism from The Chinese University of Hong Kong. Serving as a freelance journalist for the South China Morning Post, Jack has accumulated extensive media experience throughout Mainland China and Hong Kong. He harbours a keen interest in the development of both areas and is particularly attuned to local issues in Hong Kong.