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John Tsang Chun-Wah

John Tsang Chun-wah has served as Hong Kong’s financial secretary since appointed to the position by former chief executive Donald Tsang Yam-kuen in 2007. He was secretary for commerce, industry and technology between 2003 and 2006. He chaired the World Trade Organisation Ministerial Conference in Hong Kong in December 2005.

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Financial secretary John Tsang misjudges budget surplus again

Financial results show an excess of HK$40b in coffers, which is far off the $3.4b deficit estimate

PUBLISHED : Friday, 01 February, 2013, 12:00am
UPDATED : Friday, 01 February, 2013, 4:17am

The government has yet again underestimated its budget surplus, according to financial results for the nine months to December 31.

In his budget in February last year, Financial Secretary John Tsang Chun-wah estimated that Hong Kong would suffer a deficit of HK$3.4 billion in the consolidated account for the 2012-13 financial year. But for the nine months to December 31, the government is already seeing a surplus of HK$40 billion.

In the first nine months of 2010-11 and 2011-12 financial years, the government had a surplus of HK$59 billion and HK$59.5 billion, respectively. The amounts snowballed to HK$75.1 billion and HK$73.7 billion for the two years, respectively.

Experts say another surplus instead of a deficit will be seen for the financial year to March 31, with their estimates ranging from HK$10 billion to HK$70 billion.

The dean of the school of business at Hang Seng Management College, Raymond So Wai-man, and lawmaker Ronny Tong Ka-wah are expecting a figure towards the higher end.

"The government had expected a poor external environment," said So, who was referring to the European debt crisis and US fiscal cliff. "It's also hard for the government to estimate its revenue arising from land sales, investment and stamp duty."

Although the government said it would not offer cash rebates in the budget on February 27, the economist said it would now be under huge pressure to hand out "sweeteners".

Tong said that since the handover, the government had usually underestimated its budget balance by HK$35 billion to HK$40 billion. In the last financial year, the underestimation amounted to HK$69.8 billion. "It is something deliberate," he said, adding the government may have wanted to create a grim outlook to dampen the property market.

The big surplus also suggests the government constantly spends too little, he said.

"It should spend more on the medical field," he said. "The waiting time for services is too long, and hospitals are understaffed."

The Democratic Party, which also expects a hefty surplus, demanded short-term relief measures including a tax rebate and waiving of rates.

But Jennifer Wong Wan How-yee, tax partner of KPMG China, predicted that the surplus would drop to HK$10 billion in the remaining months.

Most revenue came from profits tax paid by corporations in November, which was already booked by the government, she said. Individuals pay their salaries tax this month, but the relatively small sum will not cover expenses for the rest of the quarter.

Although a surplus is expected, the resumption of construction on Home Ownership Scheme flats would be costly for the government, she said.


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This article is now closed to comments

Michael Lee
So, the FS misjudged the budget surplus - again. Apparently, the author knows of at least one person who got it right? I would REALLY like to meet that person.
This surely is a good thing and I only hope the media not make something negative out of it.
Time has come for the Government to waive all Salaries Tax and Personal Assessment Tax for one year and change to "pay as you earn" system!
If the government is prepared to give $500 million to the fisheries constituency, I think most taxpayers prefer to receive $6,000 handout!
Please shift your attitude to not replying on the government so that they can help those who really need their help such as children and old people and sick people.you should be ashame asking for handouts so causally!
Put the surplus to good use........better long term planning for housing, medicare, education, and tackling poverty. Last thing we need is the so called "sweeteners'
so we now also complain if it is a surplus. Look it is a forecast and perhaps John Tsang was conservative in this forecast which is better the other way around. Lets focus on how to use the money as opposed to bashing the government that they miss the forecast. I am not in love of this administration but negativity in the media and the people is affecting HK to implement positive policy for the long term growth of HK.
Dont give HK$6000 handouts, free money only pushes everything up, and we end up only paying more.
It was expected 2-3 month ago that the city would make a surplus instead to deficit, as with the many changes in the market due to policies and government intervention no one could have predicted this result ayear ago.
Just lower the tax burden for us and everything would be fine. OR invest in housing and public facilities (schools, hospitals, welfare etc.). But DON"T do any cash handouts!!! Those handouts are just of no use and unsustainable. Better in public facilities of some to help elders and some to improve education.
Well this mis-evaluation only shows that the main income source and usually not fixed is the sale of lands.
It only shows that property business is a good business, maybe shall we divert the debate to the property developpers?
Please don't do another $6,000 handout coz the $$$ comes from taxpayers mainly. Give tax rebates instead. And scholarships, etc to add to the paltry sum spent on education in this "world class city."
Agree about tax rebates. It goes to those who are going to pay and you are sure that the money is well used.
Usually when people received cash, they can do a lot of things with it and usually not they right thing.
It's all a game: govt forecast a deficit to quell demands for money to be spent on the welfare of HK citizens and then a big surplus magically appears so govt can justify massive infrastructure projects.


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