Hong Kong's Budget Deficit - 2024-2025

[GentleGeorge]

No problem, we just do like the rest of the world, issue bonds to fund the deficit, a well proven solid long term solution.

Brrrrr

[Mirindix]

If the budget cannot be balanced and put in order, HK might be forced to raise taxes which will also come with a new set of challenges...

[muzzdang]

As the HK revenue is largely coming from land sales and stamp duty, this is a real problem now with the depressed stock and real estate market

Attempts to broaden the tax base by introducing a GST / VAT were shot down many years ago and unlikely to be introduced in this current climate (see garbage disposal scheme)

Hang on tight, its gonna be a bumpy ride

[mmbiker]

Good news to those looking to finally get into HK property like myself! Still early, the road will be bumpy.

[er2]

Interesting. There aren't many levers to pull while the currency is pegged to a foreign currency

I don't think that's relevant. HK's gov simply got used to the gravy train of mainland money running through the city. We had ridiculously low taxes paired with quite decent benefits - the public health system, though nowhere near great, is amazing given that it is funded without a meaningful amount of patient contributions.

Something will have to give, either on the revenue or on the benefits side. A proper property tax would stop the bleeding instantly. Will it be popular - no. But effective, sure.

[GentleGeorge]

My prediction: China will continue to find ways to subsidize HK so that taxes will not need to rise meaningfully. They need a window to the World and always have done.

[Crankshaft]

My prediction: China will continue to find ways to subsidize HK so that taxes will not need to rise meaningfully. They need a window to the World and always have done.

Hope you're right. They played/are playing a big role in causing this mess, so they can fix it.

[RobRoy]

Looking into the numbers its clear the major issue is the increased spend actually, not the revenue dropped that massively. The gov machinery has to get smaller and leaner, and less well paid. Now when there is an incident and the police is called there its always 4-5-6 police standing on the street doing nothing while 1-2 is actually resolving the issue. I'm pretty sure there is a lot of fat to cut in general in the government, do they want to do it though? Probably not, issuing some bonds is easier..

[Gatts]

My prediction: China will continue to find ways to subsidize HK so that taxes will not need to rise meaningfully. They need a window to the World and always have done.

Oh yes, the people that willfully closed this window to the World, will now start opening it up for some reason...anytime now!

[Mirindix]

As the HK revenue is largely coming from land sales and stamp duty, this is a real problem now with the depressed stock and real estate market

Attempts to broaden the tax base by introducing a GST / VAT were shot down many years ago and unlikely to be introduced in this current climate (see garbage disposal scheme)

Hang on tight, its gonna be a bumpy ride

While at some point very large, land sales were for many years not the largest revenue driver but companies (profits tax)

Hopeful here HK will over time be able to again balance the budget, meaning also cutting down on costs which HK had a good track record of... much better than most other jurisdictions on planet earth addicted to debt-fueled spending sprees...