Tax rise imminent, warns KPMG China
KPMG China predicts a budget deficit due to government spending and says a goods and services tax will help to widen the tax base
Taxes could rise in the near future as government spending on public housing and land development are expected put the budget in the red, a leading accounting firm has predicted.
To ease the burden on individual taxpayers, KPMG China is urging the government to reconsider bringing in an indirect tax such as a goods and services tax (GST) which it says will widen the tax base and stabilise incomes.
In the firm's annual budget forecast yesterday, Jennifer Wong Wan How-yee, a tax partner, said the government could record a surplus of HK$23.7 billion for this financial year which ends in March.
The prediction goes beyond the government's initial forecast in February last year, when Financial Secretary John Tsang Chun-wah estimated that Hong Kong would have a budget deficit of HK$3.4 billion this financial year.
Last week, it was revealed that there was actually a surplus of HK$40 billion in the nine months to December 31.
Wong attributed this surplus to the higher revenues from land sales, stamp duties and tax collection but has forecast a budget deficit of HK$45.9 billion for the next financial year.
"The chief executive has demonstrated his determination to increase public housing and develop new land extensively in his policy address," she said.