Ernst & Young: Hong Kong government recorded a deficit of 980 billion Hong Kong dollars in the current fiscal year, reducing fiscal reserves to 6.37 trillion Hong Kong dollars.

EY expects that the Hong Kong government will record a deficit of HK$98 billion in the 2024-25 fiscal year, more than double the initial forecast of HK$48.1 billion announced in the February 2024 budget. As of March 31, 2025, the fiscal reserves are expected to decrease to HK$637 billion, only enough for the government to operate for 8 months without any income. EY's Managing Partner for Hong Kong and Macau, Iris Li, stated that the government should explore new sources of income and manage finances carefully to ensure long-term economic stability. When considering fiscal measures, the principle of "those who can afford more should pay more" should be taken into account to avoid hasty actions that may impact the local economy and livelihoods of Hong Kong residents. EY's Tax Managing Partner for Hong Kong and Macau, Kevin Cheng, suggested introducing tax incentives for Real Estate Investment Trusts (REITs) and commodity traders to further promote the development of these industries in Hong Kong. According to the proposals in the 2024-25 budget, stamp duty on the transfer of REIT units is already exempt. EY further recommended taking measures to revitalize the REIT market, such as exempting stamp duty on existing REITs acquiring new properties, supporting new REITs with a stamp duty refund scheme, and introducing tax incentives for qualified REITs. EY's Financial Services Tax Managing Partner in Hong Kong, Paul Ho, suggested that the government should review existing subsidy measures to ensure that they truly alleviate the difficulties of those in need and should take a more targeted approach to maintain a healthy fiscal reserve level. The Hong Kong government announced in previous budget statements that it would review the fare concession schemes for elderly and eligible persons with disabilities (i.e. the HK$2 scheme) and the fare subsidy scheme for public transport to ensure that these subsidies are provided in a financially sustainable manner. The government could consider introducing tiered subsidies to achieve a more equitable distribution of public resources.