Government out by HK$50b on budget sums, say accountants
Accountants estimate this year's surplus will be 6 times the financial chief's initial forecast
The government has again made a gross underestimation of its budget surplus, according to accountants who put the figure at more than HK$58 billion, compared to the government's estimate of HK$9.1 billion.
In separate press conferences, the Hong Kong Institute of Certified Public Accountants and PricewaterhouseCoopers Hong Kong respectively predicted the government would post a HK$60 billion and HK$58.1 billion surplus in the fiscal year ending on March 31 - more than six times the figure forecast by Financial Secretary John Tsang Chun-wah in February's budget.
The accountants put the huge difference down to higher-than-expected stamp duty and income tax payments.
Stock market transactions also incur stamp duty and, along with property sales, big transactions here have contributed to the rise in stamp duty receipts, said the accountants.
"It is common to see a difference between the estimated and actual surplus, but the government has underestimated its surplus over the past five fiscal years, showing its conservative approach," said Florence Chan Yuen-fan, of the institute's taxation faculty executive committee. The gap between estimated and actual figures ranged from HK$26.7 billion last fiscal year to HK$100.3 billion in 2010-11.
In November, the city's fiscal reserves stood at HK$768.6 billion, up from HK$710.2 billion the previous year.
The institute suggested that business and the city's competitiveness would be boosted by using the windfall to cut profit taxes for companies with an annual turnover of less than HK$5 million.
With many Hongkongers leasing their homes, it also called for rents to be tax-deductable, complementing the mortgage-interest deduction available for home buyers.
Chan also suggested widening the marginal tax bands from HK$40,000 to up to HK$50,000. She added that instead of making ad-hoc changes to child and dependent-parent tax allowances, the government should establish a mechanism to adjust the amounts according to inflation.
Tsang has indicated that budget surpluses over the next few years would be used for the new "housing reserve" to help meet the government's goal of building 290,000 public flats in the next decade.