Six key Hong Kong budget takeaways you need to know: spend, spend, spend on the future
Awash in cash, the city plans to reduce both salaries and profits taxes as well as invest in technology, young people and the elderly
1. The treasury is awash in cash
Chan confirmed Hong Kong held a massive surplus of HK$138 billion (US$17.6 billion). He said he would spend HK$50 billion – nearly 40 per cent – on immediate relief measures for the public. The rest would be invested in improving public services and the future.
For the first time in five years, public expenditures account for slightly higher than 21 per cent of GDP. That represents an increase of about 1 per cent from the usual level. Chan said he would ensure what is spent would tackle the city’s “actual needs”.
Revenue for the 2017/18 financial year hit HK$612.4 billion – 20 per cent higher or HK$104.7 billion more than originally estimated. As for expenditures, Chan revised his projection down to HK$474.4 billion – 3.5 per cent lower or HK$17 billion less than the original estimate.
Fiscal reserves were expected to reach HK$1.092 trillion by March 31, the end of the financial year, while the housing reserve would reach HK$78.8 billion. The projections were more modest than what his predecessors said. Chan also predicted inflation in 2018 to be moderate, at 2.2 per cent, citing cost pressure brought about by sustained economic growth.