HK government's deficit forecast again in doubt
There are now questions about the government's earlier forecast of a budget deficit, as accounting firm Deloitte is predicting a HK$60 billion budget surplus for the fiscal year ending in March.
Deloitte's forecast is the polar opposite of the government's estimate of a HK$8.5 billion deficit made in March last year.
'The major reasons for the difference include a higher GDP growth, expected to be at 6 per cent instead of 4 to 5 per cent estimated by the financial secretary, a higher-than-expected revenue from land sales, as well as profits tax and salaries tax,' Deloitte said yesterday.
The firm's estimate is based on the government's latest announcement of a surplus of HK$21.2 billion for the eight months to November 30.
In addition, the government is expected to generate a surplus of about HK$38.8 billion in the last four months.
Rival auditing firm Ernst & Young estimates a budget surplus of HK$53 billion to HK$58 billion because of 'record income from land sales and additional stamp duty collected in the first half of 2011-12 from an active property market and stock transactions'.
Earlier this month, accounting firm PricewaterhouseCoopers said it expected a budget surplus of HK$55 billion.
If these forecasts pan out, it won't be the first time the government has gotten its sums wrong.
In the previous fiscal year, it was off the mark by a whopping HK$100.3 billion in its forecast.
Financial Secretary John Tsang Chun-wah had originally estimated a HK$25.2 billion deficit. However, the expected deficit became a HK$75.1 billion surplus instead.
In 2001, then Financial Secretary Donald Tsang Yam-kuen predicted a HK$3 billion deficit for the 2001-02 financial year, but the actual deficit was HK$63.3 billion.
Analysts say these discrepancies arise because the government consistently adopts a conservative approach in drafting budgets.
Anticipating a significant surplus this year, Deloitte proposed that the government waives salaries tax in the coming budget, widen the tax bands, and increase allowances such as those for children. It also suggested a reduction of the profits tax rate.
Deloitte expects a budget surplus of this much, in Hong Kong dollars, for the fiscal year 2012-13