12 things to know about Hong Kong’s budget and how it will affect you

Immediate scrapping of property curbs, issuing of large amounts of bonds for infrastructure among measures unveiled in finance chief Paul Chan’s budget address
Fine balancing act amid record government deficit also leads to slashing of scale of one-off relief measures and new or raised taxes

Hong Kong budget 2024-25

Lilian Cheng

Published: 3:10pm, 28 Feb 2024

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Hong Kong’s finance chief has unveiled a raft of measures touching on different economic concerns in his eighth budget blueprint. Top of the list was the bold move of scrapping all cooling measures in the property market, and the issuing of large quantities of bonds as a way to finance infrastructure development.

Sharing his plan at the Legislative Council on Wednesday, Paul Chan Mo-po also sought to strengthen the city’s coffers by slashing the scale of one-off relief measures as well as charging new taxes amid a record government deficit. No surprise too was the conspicuous absence of consumption vouchers, a feature of the past few years.

Here are the 12 things you should know about the latest blueprint.

1. All property cooling measures scrapped with immediate effect

No more buyer’s stamp duty for non-permanent residents, stamp duty for second-time purchasers or special stamp duty for residential property sold within two years.

2. Sweeteners reduced or removed

A 100 per cent salaries tax deduction will have a HK$3,000 (US$383) ceiling, half the level of last year. Property owners can only apply for one quarter of rate concessions, up to HK$1,000 for each site, instead of two quarters last year. No electricity subsidy has been announced, while consumption vouchers have been scrapped.

3. More bonds as new revenue source

Debt with HK$120 billion will be issued this year, of which HK$70 billion will be a retail tranche that includes HK$50 billion of Silver Bonds and HK$20 billion in green and infrastructure bonds.

Between HK$95 billion and HK$135 billion in bonds will be earmarked annually to drive the development of the Northern Metropolis and other projects.

4. Higher salaries tax for top earners

The first HK$5 million of net income will still be subject to a standard 15 per cent rate, but the portion exceeding HK$5 million will be charged 16 per cent.

5. Tobacco tax increased for second consecutive year

The rate has been increased to 80 HK cents per stick with immediate effect, bringing the cost of each pack of 20 to about HK$94.

Hong Kong ditches all property curbs in sweeping move to boost ailing market

6. Progressive rating system changes to be proposed

Flats with a rateable value of more than HK$550,000 will be affected, or about 1.9 per cent of relevant properties.

7. Hotel tax revived

A charge of 3 per cent will be levied on all accommodation fees paid by guests from January 2025, after a waiver imposed since July 2008.

8. Financing of artificial islands project in spotlight

Preliminary studies on the Kau Yi Chau Artificial Islands, or Lantau Tomorrow project, will continue but the government will consider factors such as “public finance position” in its implementation timetable. A government source said the reclamation part of the project would be postponed.

9. Review on transport subsidy

The HK$2 subsidy scheme for elderly and disabled residents will be reviewed this year to see how it can be made financially sustainable. Chan pledged that the scheme, which costs about HK$4 billion in 2023-24, would not be cancelled.

10. Pyrotechnics and drone shows every month

The new shows are intended to create “many more enchanting moments” for visitors, while the Tourism Board will also revamp its nightly light-and-sound show, “A Symphony of Lights”.

11. HK$10 billion for cutting-edge industries

Companies in life and health technology, artificial intelligence (AI) and data science, advanced manufacturing and new energy technology will benefit. Cyberport will get another HK$3 billion for the launch of an AI subsidy scheme.

12. Economy to grow between 2.5 and 3.5 per cent

Further acceleration is expected between 2025 and 2028 at an average of 3.2 per cent per year. The budget deficit for 2023-24 reached HK$101.6 billion, with fiscal reserves expected to hit HK$733.2 billion by the end of March.

Given bond issuance this year, the deficit is predicted to reach HK$48.1 billion, while fiscal reserves will drop to HK$685.1 billion.