Xu Zhengyu: Taking multiple measures to narrow Hong Kong's fiscal deficit, striving for a balanced budget within a few years.

The Director of Hong Kong Financial Services and the Treasury Bureau, Mr. Xie Zhengyu, stated that in the 2024/25 fiscal year, the Hong Kong Financial Secretary proposed a comprehensive financial consolidation plan in the Hong Kong government's "Budget." This plan includes controlling expenditure growth, increasing revenue, and issuing government bonds to gradually narrow the fiscal deficit. He mentioned that the work on formulating the 2025/26 "Budget" will soon begin, with a review of the latest financial situation and forecasts to develop measures aimed at restoring fiscal balance in the coming years. In terms of expenditure, the Hong Kong government is strictly controlling operational expenditure growth, including continuing the zero growth in civil service establishments and keeping the establishment at a level not exceeding that of March 2021. The government plans to save 1% of recurrent expenditure annually for the years 2024/25 to 2026/27 under the "Resource Efficiency Optimization Plan." Additionally, the government will review the cost-effectiveness of infrastructure spending and adjust the project implementation schedule based on priority. Regarding revenue, in the 2024/25 fiscal year, the Hong Kong government will implement four measures to increase revenue, including: (i) implementing a two-tier tax rate for salaries tax and personal income tax starting from the 2024/25 tax year; (ii) raising the business registration and branch registration fees by 10% from April 1 this year; (iii) implementing a progressive property levy system for residential properties from January 1, 2025, and (iv) resuming the collection of hotel room tax at a rate of 3% from January 1, 2025. It is estimated that these measures will bring in approximately HK$31 billion in revenue for the Hong Kong government each year. Furthermore, starting from 2025, the Hong Kong government will impose a 15% global minimum tax rate and levy the Hong Kong Minimum Supplement Tax on large multinational corporate groups with annual total revenue of HK$750 million or more. Based on current estimates, these measures are expected to generate approximately HK$15 billion in additional tax revenue for the government annually starting from the 2027/28 fiscal year. The government plans to submit relevant legislation to the Legislative Council by January 2025 or earlier. Taking into account the pace of promoting the development of the Northern Metropolis Area and other infrastructure projects, the Hong Kong government plans to issue government bonds totaling approximately HK$95 billion to HK$135 billion annually from the 2024/25 to 2028/29 fiscal years. It is estimated that during this period, the ratio of government debt to GDP will be around 9% to 13%, significantly lower than most other advanced economies. When formulating the 2025/26 "Budget," the government will review the scale and method of issuing bonds over the next few years. As of the end of October of this fiscal year, the total income from land sales through tender and land transactions involving private agreements, contract revisions, land exchanges, and so on, amounted to approximately HK$3.7 billion. The Hong Kong government will assess the situation at the time, taking into account the actual conditions (including economic conditions and market changes), and prudently and practically release land to the market. Additionally, the government will update the estimated land revenue in the 2025/26 "Budget" to be announced in February next year.