Hong Kong's Financial Secretary Paul Chan Mo-po unveiled the Budget for the fiscal year 2025/26, emphasizing measures aimed at economic stability and social welfare. This marks the administration's third budget presentation, and it carries significant ramifications for the citizens of Hong Kong.
According to Chan, one of the standout features of the budget is the decision to freeze salaries for all civil servants, which will also apply to the Chief Executive, politically appointed officials, and members of the Legislative Council. The government plans to reduce the workforce significantly, estimating the elimination of approximately 10,000 positions by April 2027 through annual 2% workforce reductions. This move is seen as part of broader efforts to optimize human resources and curtail government spending.
To alleviate the financial burdens on citizens, the budget proposes retaining the much-discussed two-dollar transport fare programme, also known as the "$2 transport fare concession scheme". The programme will maintain eligibility criteria for the elderly and persons with disabilities but will limit the number of rides to 240 per month for fares priced at HK$10 or lower, with others charged at 20% of the fare. This revision reflects both fiscal prudence and the government’s commitment to support vulnerable groups.
Tax reliefs also feature prominently; Chan announced the halving of tax reduction limits for personal income and profits tax to HK$1,500, benefiting approximately 2.14 million taxpayers and 165,400 businesses across Hong Kong. This reduction is projected to cost the government around HK$2.9 billion, but officials argue it is necessary for economic recovery amid the post-pandemic financial climate.
The government assured citizens receiving social benefits, such as Comprehensive Social Security Assistance (CSSA), would receive an interim payment equivalent to half of the CSSA for one month, which includes other allowances such as for the elderly and persons with disabilities. An additional funding of HK$3.1 billion has been allocated to support these vulnerable cohorts.
Meanwhile, the budget also introduces adjustments to property-related taxes, including the waiver of property tax capped at HK$500 for residential properties and increasing the stamp duty threshold from HK$3 million to HK$4 million. The administration expects this reform to benefit around 15% of property transactions per year.
A notable increase to funding for public transport subsidies, along with more stringent criteria for accessing those subsidies, was also announced. Starting June 2025, the threshold to qualify for monthly transport subsidies will rise from HK$400 to HK$500, keeping the subsidization at one-third for expenditures above this new threshold.
On the income revenue side, the government plans to introduce expanded fees for departing airplane passengers, increasing the fare from HK$120 to HK$200 from the third quarter of 2025. This reform aims to generate approximately HK$1.6 billion yearly. Further refinements include the assessment of road toll fees and vehicle license fees.
Chan indicated the government intends to issue bonds up to HK$1.95 trillion over the next five years to finance infrastructure projects, indicating this is part of their sustainable financing plan. The anticipated fiscal deficit for the year 2025/26 stands at around HK$67 billion, contributing to the general financial reserve expected to deplete to HK$580.3 billion.
Despite the stringent fiscal measures, public response has varied widely. Some community leaders express concern over the expected impacts of public service layoffs, particularly prioritizing worker welfare amid economic recovery. Others appreciate the targeted assistance approaches for lower-income households and seniors.
The Civil Service Bureau stated it would closely monitor the budget’s implementation to mitigate adverse impacts on public service workers. Community insights point to needs for more decisive actions enhancing job security and social safety nets, particularly during economic rebuilding.
Enhancing public benefits, Chan referenced the introduction of 14 Community Rehabilitation Centers across Hong Kong, aimed at aiding individuals with moderate to severe care needs, supported by significant government funding. Investment will also be directed toward public healthcare, including upgrades to local health services.
“It’s time for any government to think beyond immediate fiscal measures and strengthen community resilience and well-being,” Chan highlighted. Public sentiments reflect growing optimism about local economic recovery but remain cautious about future adjustments planned under the new budget.
Critics urge for greater fiscal transparency, arguing this budget carries both immediate benefits and potential long-term costs. Future public consultations will likely be integral to shaping the implementation of budget measures and assessing their impacts sufficiently.
Looking forward, observers maintain the necessity for Hong Kong to balance economic reforms with social responsibilities, emphasizing the importance of inclusive planning and extensive public engagement to navigate the cyclical nature of local economic challenges.