Opinion | Whether it’s diversifying Hong Kong’s economy or improving traffic, taxes and levies are the way to go

In the latest budget, the financial secretary says he is bringing the tax policy unit under his office’s control. The government has become more hands-on in using tax and related measures to encourage economic and social development

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Financial Secretary Paul Chan leaves after delivering his budget speech at the Legislative Council on February 27. Photo: Bloomberg

Published: 2:24pm, 28 Feb 2019Updated: 8:45pm, 28 Feb 2019

We should not expect significant surprises from a budget as large and complex as that of the Hong Kong government. Budgets should be measured by how well they address Hong Kong’s needs now and into the future. And in many ways the budget this year continues from last year’s in addressing the needs of the city’s various sectors.

The financial secretary forecast a healthy surplus of HK$58.7 billion for 2018-19. Overall, fiscal reserves are expected to reach a robust HK$1,161.6 billion by March 31. Over the medium term, the government expects to maintain its solid position for the next five years. Hong Kong is fortunate that its government is in a position to continue investing in a wide array of measures.

A focus on livelihood issues is expected, with the usual relief and welfare measures to return part of the government’s surplus to the people of Hong Kong. Money is being allocated for a large number of projects to improve the general quality of Hong Kong’s environment and living space. This includes HK$20 billion for additional welfare facilities such as childcare centres and elderly centres.

The financial secretary’s continued focus on ensuring adequate housing production and housing affordability is welcome. The high cost of housing will see the government maintaining Hong Kong’s very high stamp duties for the foreseeable future.

Additional money is going into economic development. There are more measures to boost the financial services industry, and a particular focus on the asset management industry. The government is studying the possibility of introducing a more competitive tax arrangement for private equity funds, and is enhancing tax measures for corporate treasury centres and insurance companies. Of note is the focus on the transport sector and, in particular, the shipping industry. There are proposals to study or provide incentives for ship leasing and marine insurance.

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