Hong Kong budget 2024-25: government should cut property cooling measures gradually rather than all at once, tax expert and lawmaker say
- Authorities urged to refrain from scrapping stamp duties in one go to avoid triggering real estate market volatility, in contrast to views from top political parties
- Calls among those made to finance chief Paul Chan ahead of budget next week, as authorities grapple with ballooning deficit and concerns over investor confidence
Carol Liu Zhaohua, president of the Taxation Institute of Hong Kong, said authorities should remove property stamp duties in phases to better stabilise the market amid falling investor confidence.
“At present buyers’ confidence has weakened so it is better to gradually scrap the property cooling measures in phases to revive the market step by step,” she told a radio programme.
Popular calls have included scrapping curbs such as a special stamp duty applied to a residential property resold within 24 months, a buyer’s stamp duty for non-permanent residents and a double stamp duty on flats for second-time purchasers. The stamp duty rates range between 10 and 20 per cent.
Liu said the government’s move to reduce certain stamp duties in October last year had failed to make a big impact on the real estate market.
Over the past four months, the number of private residential property transactions soared by 64 per cent, from 2,123 in October to 3,477 last month.
In last year’s policy address, Chief Executive John Lee Ka-chiu announced the rollback of some property cooling measures in a bid to “alleviate the financial burden” on residents.
Changes included ensuring buyers only needed to pay stamp duty if they sold their residential property within 24 months, instead of the previous threshold of 36 months.
The policy change also halved the stamp duty paid by non-first-time buyers, non-locals or companies from the previous rate of up to 30 per cent.
Election Committee lawmaker Wendy Hong Wen agreed, saying the government should refrain from scrapping all cooling measures in one go to avoid causing volatility in the market.
“The most important thing is to stabilise the market. If we suddenly scrap all the cooling measures in one go, will there be a surge in property sales causing the market to collapse?” she said. “So, we should take it slowly by lifting the property curbs.”
But four of the city’s major political parties are among those urging the finance chief to consider overhauling the stamp duties. They include the Democratic Alliance for the Betterment and Progress of Hong Kong, the city’s largest party, which holds 19 of the 90 Legislative Council seats.
Both Liu and Hong also called for the authorities to start looking into how to broaden the city’s narrow tax base amid the high deficit.
“It’s time to study broadening the tax base now for creating more income in the future,” Hong said.
“But it isn’t time to introduce any new taxes now amid the weakened economy. We have to think about the impact of new tax measures on our investors … We need confidence now.”
Sze Lai-shan, deputy director of the Society for Community Organisation, an NGO and human rights advocacy group, also called on the government to hand out targeted “sweeteners” to those in need, such as low-income residents.
“In the past the government rolled out the consumption vouchers but not everyone needed them,” she said. “But it is better to just hand out HK$5,000 [US$639] to those in need if the authorities hope to alleviate poverty.”
