Opinion | After celebrating its surplus, Hong Kong must work on sustaining it

After consecutive operating deficits, the operating account has returned to profit. Simultaneously, the consolidated account records a HK$2.9 billion (US$370.6 million) surplus for 2025/26, signalling stability. This turnaround is driven largely by a buoyant stock market and a stabilising property sector, reviving stamp duty revenues and investment income.

This provides fiscal space for the government to put money back in Hongkongers’ pockets. Marking the first adjustment to various tax allowances since the 2016/17 financial year, this move fully shows the government’s resolve and commitment.

Increasing the basic and married person’s allowances by 10 per cent helps shield the workforce from the cumulative inflation of the past decade. Additionally, doubling the ceiling of the one-off tax reduction to HK$3,000 per case offers further relief. Furthermore, raising the child allowance and additional deduction for newborns to HK$140,000 is a necessary signal to boost the fertility rate.

As some say, tax allowances are “easy to raise, hard to lower”, but these are justifiable investments in social stability.

But before we pop the champagne, we need a reality check. Today’s surplus offers only breathing room. We must not overlook the deeper structural elements and long-term trends facing our public finances.