Banner year for stocks set to boost tax revenue
The robust stock market and good returns from investments are expected to boost government revenue this year, Secretary for Financial Services and Treasury Frederick Ma Si-hang said yesterday.
'I believe the income from stamp duty will exceed the target because the stock market is really robust. The daily trading volume has been around HK$40 billion, sometimes more than HK$50 billion,' he said.
'The government investments and land sales have yielded good returns. The government also did a good job in controlling the budget.'
The estimated revenue for the 2006-07 fiscal year is HK$211 billion, of which HK$169 billion would come from taxation.
Mr Ma said the positive outlook meant the government would face little financial pressure in the next three to five years.
But it would be up to Financial Secretary Henry Tang Ying-yen to decide if there would be any tax cuts in the next budget.
The increase in stamp duty and profits tax receipts - a result of the economic recovery - is likely to put fresh pressure on Mr Tang to consider some form of tax relief next year. The government posted a HK$21.4 billion surplus last year. A major contributor was the HK$26 billion in revenue from bond sales.
Mr Ma said the decision not to pursue a goods and services tax was not linked to the strong revenue estimates.
'They are two totally different things. The broadening of the tax base is a long-term problem that Hong Kong needs to solve ... it is not something to be mentioned together with this year's financial accounts.'
He said the GST was shelved for the time being because it did not have public support.
But widening the tax base was essential for the future due to the ageing population. He said the government would use the last three months of the consultation period to come up with other measures to achieve this.