The government of Hing Kong is the owner of one of the largest fiscal surpluses in the world, driven primarily by the boom in real-estate and stock-market while on the flip side, the residents of Hong Kong are finding it near to impossible to cope with the least affordable property market in the world.
According to an estimate by accountancy firm PwC, there could be as much as HK$168 billion ($21.5 billion) in surplus from the previous fiscal of 2017-18 with the Hong Kong government when the budget for the next fiscal of 2018-19. The PwC said that this surplus amount was drive by more than expected revenue from land sales, profits tax and stamp duty and it is at least ten times of what the government has predicted it would have at HK$16.3 billion.
For third quarter of the current fiscal, the budget surplus was about 8.6 per cent of the gross domestic product which is the highest for any quarter since 1999. And according to Organization for Economic Co-operation and Development data, the overall fiscal surplus for the government could be the highest for ant of the developed economies if the quarterly trend is continued or is even close to what it achieved in the third quarter for the full fiscal year.
There is likely to be many suggestions for the government now on how to spend the surplus amount that they now have in hand even as Hong Kong is now put in the same bracket as New York with respect to income inequality, and despite continued concerns that the like of Shenzhen or Shanghai are catching up with Hong Kong as a financial center.
“They (the government) can use policy buffers to support growth in the long run,” Mahamoud Islam, an economist at Euler Hermes, said. He said that the investments can be made keeping in mind that a more difficult period for the global economy is forecast as early as 2019.
Enhancing the city’s capabilities of research and development activity should be among the top of the list in terms of immediate investment programs, Islam suggests. He said that the city should encourage education programs for creating more architects, engineers and consultants of other commercial services as part of the process of development of talent for the Belt and Road Initiative of China where the city is strategically positioned.
The tax payers should also be benefitted. Enhancement of child allowance by as much as 20 per cent and increasing the salaries tax brackets have been proposed by PwC. And according to The Taxation Institute of Hong Kong, for first-time, locals purchasing homes that are valued below HK$6 million, the stamp duty could be waived by the government.
(Source:www.bloomberg.com)
According to an estimate by accountancy firm PwC, there could be as much as HK$168 billion ($21.5 billion) in surplus from the previous fiscal of 2017-18 with the Hong Kong government when the budget for the next fiscal of 2018-19. The PwC said that this surplus amount was drive by more than expected revenue from land sales, profits tax and stamp duty and it is at least ten times of what the government has predicted it would have at HK$16.3 billion.
For third quarter of the current fiscal, the budget surplus was about 8.6 per cent of the gross domestic product which is the highest for any quarter since 1999. And according to Organization for Economic Co-operation and Development data, the overall fiscal surplus for the government could be the highest for ant of the developed economies if the quarterly trend is continued or is even close to what it achieved in the third quarter for the full fiscal year.
There is likely to be many suggestions for the government now on how to spend the surplus amount that they now have in hand even as Hong Kong is now put in the same bracket as New York with respect to income inequality, and despite continued concerns that the like of Shenzhen or Shanghai are catching up with Hong Kong as a financial center.
“They (the government) can use policy buffers to support growth in the long run,” Mahamoud Islam, an economist at Euler Hermes, said. He said that the investments can be made keeping in mind that a more difficult period for the global economy is forecast as early as 2019.
Enhancing the city’s capabilities of research and development activity should be among the top of the list in terms of immediate investment programs, Islam suggests. He said that the city should encourage education programs for creating more architects, engineers and consultants of other commercial services as part of the process of development of talent for the Belt and Road Initiative of China where the city is strategically positioned.
The tax payers should also be benefitted. Enhancement of child allowance by as much as 20 per cent and increasing the salaries tax brackets have been proposed by PwC. And according to The Taxation Institute of Hong Kong, for first-time, locals purchasing homes that are valued below HK$6 million, the stamp duty could be waived by the government.
(Source:www.bloomberg.com)