Hong Kong budget 2024-25: increase in salaries tax for those earning more than HK$5 million a year, hotel levy revived in efforts to offset deficit
- Annual income exceeding HK$5 million will be subject to 16 per cent rate; changes to affect 12,000 wealthy taxpayers in city
- ‘The economic environment has been rather difficult in recent years amid intensifying geopolitical tensions,’ finance chief Paul Chan says
Hong Kong will raise the salaries tax for those earning more than HK$5 million (US$639,035) a year and revive a hotel accommodation levy, the finance chief has revealed in his budget address, as part of efforts to offset a ballooning HK$101.6 billion deficit.
Financial Secretary Paul Chan Mo-po on Wednesday also announced one-off sweeteners, at a smaller scale compared with last year, such as salaries and profit tax cuts, as well as halved rate concessions for properties.
The budget delivered by Chan in his seventh year in the role was regarded by some observers as the most challenging one as the city struggles to revitalise a sluggish economy.
“The economic environment has been rather difficult in recent years amid intensifying geopolitical tensions and the rise of unilateralism and protectionism,” Chan told lawmakers.
“Its impact on [mainland China’s] economy and even the Hong Kong economy, coupled with fierce competition from other economies, has caused unease among some about the future development of Hong Kong.”
The HK$101.6 billion budget deficit for the financial year ending in March is almost double the government forecast made last year. Authorities have also revised the revenue forecast to HK$554.6 billion, 13.7 per cent lower than the original estimate.
Chan said the city’s fiscal reserves had dropped to HK$733.2 billion due to challenges posed by the Covid-19 pandemic and the external environment.