Hong Kong government’s land revenue fell to HK$88.7 billion in 2019-20, lowest level in five years
- Last year’s figure represented a 37.4 per cent drop from the year before, and was lowest since 2015-16, when only HK$60.9 billion in land revenue was collected
- One analyst says drop was largely a result of policy change in 2018 to set aside fewer plots for sale to private sector in favour of prioritising public housing
The Hong Kong government collected just HK$88.7 billion (US$11.4 billion) last year in land premium revenue, the least it has received in five years, new figures show.
The revenue – which mostly comes from the sale of government land, modifications to existing leases and other fees – accounted for only 16.3 per cent of total inflows into government coffers in the 2020-21 financial year. It was still the second largest source of government income, however, behind profits tax, which accounted for almost a quarter of total revenue.
According to a written reply to a Legislative Council question on Wednesday, land premium revenues in the previous four financial years never fell below HK$116.8 billion. They hit a five-year high in 2017-18 of HK$164.8 billion.
But last year’s figure represented a 37.4 per cent drop from the HK$141.7 billion collected the year before. It was also the lowest since 2015-16, when only HK$60.9 billion in land revenue was collected.
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Lau Chun-kong, chairman of the Institute of Surveyors’ land policy panel, said the drop was largely a result of a policy change in 2018 to set aside fewer plots for sale to the private sector in favour of prioritising public housing.
“Land premiums will naturally fall because there is less land available for the private sector,” he said, adding that the drop in revenue was a signal to the government to increase land supply and sell off sites without delay.
In his budget speech in February, Financial Secretary Paul Chan Mo-po blamed the drop in land revenue largely on the deferment of the sale of a prime commercial site on the Central harbourfront.
He also warned of a projected record deficit for the current financial year and more in the years ahead, noting the economy was struggling to recover from the Covid-19 pandemic.
To increase revenue, the government will raise the stamp duty on stock transactions from 0.1 per cent to 0.13 per cent of the value of the trade for both the buyer and seller starting on August 1. The measure could bring in HK$12 billion in revenue in its first year.
Chinese University economist Terence Chong Tai-leung also said last year’s drop in land revenue had been expected, and recommended further raising the stamp duty on equity trading in the future to help lift government revenue.
“Profits tax and land premium are the largest sources of government revenue. Profits tax cannot be raised because there will be huge opposition to the move, but raising the stamp duty on stock transactions won’t have as many side effects and could help generate more revenue,” he said.
“One benefit is the stamp duty will not necessarily be levied on all Hongkongers.”
