The upcoming Hong Kong Budget for 2025 is set to be announced on February 26, 2025, by Financial Secretary Paul Chan Mo-po. This announcement is highly anticipated as the city navigates through pressing fiscal challenges, particularly significant budget deficits experienced over the past few years. Recent statements suggest this budget will aim to implement innovative fiscal policies aimed at spurring economic growth and attracting investments, even as the global economic climate poses uncertainties.
During his latest blog post, Chan emphasized the importance of leveraging public resources to facilitate sustainable societal development and improve living standards. He stated, "This budget will propose enhanced fiscal integration strategies for sustainable development," highlighting the dual focus on maintaining both social services and strict control over public expenditure amid fiscal challenges.
Reports indicate the current fiscal year will likely see deficits nearing HK$100 billion, raising concerns about Hong Kong's financial health since many expect similar deficits to persist for several more years. According to Eric Yang, President of the Hong Kong General Chamber of Commerce, "If borrowing is aimed at future investments, it is viable and necessary.” Yang's remarks suggest there is strong support within the business community for strategic borrowing as long as it is tied to tangible growth initiatives.
The discussion around tax reforms is anticipated to be at the forefront of the budget announcement. The Hong Kong Taxation Institute proposes raising the marginal tax rate from 16% to 17% on individuals earning over HK$5 million annually. Steven Shek, the President of the institute, noted such changes could bring in additional revenue estimated at HK$900 million. He added, "Even if we raise this rate, it will still be lower than neighboring markets like Singapore, ensuring Hong Kong remains attractive for high-income earners. ”
On the topic of land sales, which have been drastically limited due to decreased revenues, Legislative Council member Lam Kin-fung called for more flexible policies. He said, "We need to be more flexible with our policies to attract businesses,” advocating for adjustments to land sale conditions to stimulate greater interest from developers. Lam’s comments reflect the urgency for governmental strategies to adapt to competitive regional pressures, particularly from markets like Singapore.
With the city’s dire financial situation, Lam warned, "The situation won’t improve overnight; it will take at least two to three years to balance the budget,” highlighting the challenges the government faces moving forward. His sentiments resonate with many residents who are closely watching any changes or proposals put forth by the government.
On another note, the budget will introduce the traditionally routine welfare initiatives, such as subsidized transportation fares for the elderly, which has been received with mixed feedback. To address concerns about its complexity, Lam proposed simplifying the current schemes, especially adjustments for inflation and age demographics.
Hong Kong has frequently dealt with budget shortfalls since the fiscal year 2019/20, with many experts pointing to multiple factors, including decreased tourism and global economic pressures. Stakeholders from different sectors are hopeful the budget will offer pragmatic solutions to these systemic issues, framing 2025 as both challenging and full of potential opportunities.
With the date of the announcement approaching, anticipation continues to build. Citizens, business leaders, and government officials alike are hopeful the upcoming budget will reflect innovative thinking and responsible fiscal management to navigate through these tumultuous times effectively.