Competitiveness was the theme of Hong Kong’s 2014/15 budget, but a significant portion of the budget speech looked at the maintenance of Hong Kong’s healthy public finances in the face of increased spending on education, social welfare and healthcare.
Total government revenue for 2014/15 is budgeted at HKD430.1bn, with salaries and profits tax, estimated at HKD177.5bn, remaining the major sources of revenue. Land revenue is estimated to be HKD70bn. The revised estimate for government revenue for 2013/14 is HKD447.8bn (USD57.8bn), some HKD12.7bn or 2.9 percent higher than the original estimate.
Amongst other measures in the Budget the Financial Secretary proposed further one-off relief measures, aimed primarily at relieving short-term financial pressure, or as a counter-cyclical measure to preserve economic stability and short-term employment. The tax relief for 2014/15 involves around HKD20bn in lost government revenue, with a fiscal stimulus effect on GDP of 0.7 percent.
These measures include a reduction in profits tax, salaries tax and tax under personal assessment for 2013-14 which will benefit around 1.87m taxpayers, and cost about HKD10.2bn billion.
To help the development of the financial services sector in Hong Kong, private equity funds are also to enjoy the tax exemption for offshore funds to attract them to expand their business in Hong Kong. The Financial Secretary confirmed that an industry consultation has been completed and the legislative work will be taken forward as soon as possible.
