The Hong Kong Institute of Certified Public Accountants estimated today that Hong Kong's fiscal deficit for 2019/20 will reach HK$18.1 billion (US$2.33 billion) at the end of March.
The deficit has been driven by the downturn in the economy, due to the effects of US-China trade dispute during 2019-20, the impact of the social unrest on specific sectors, such as tourism, retail and catering, and now also concerns over the spread of the novel coronavirus, said the HKICPA.
However, fiscal reserves are expected to stand at HK$1.15 trillion (US$193 billion), an adequate level to cover government expenditure on local community support amid the economic downturn, the accountancy body pointed out.
“The increasing pressure on public finances, coupled with intensifying competition for business from other jurisdictions in the region and globally, and the changing international tax landscape, all point to a need to take a harder look at the city’s long-term positioning and competitiveness,” said HKICPA president Johnson Kong.
To maintain Hong Kong’s strength as a global financial hub, the government needs to conduct comprehensive review of business and tax policies to help secure Hong Kong’s future economic success, he added.
“Apart from a holistic review of the tax system, our proposals strongly emphasise improving the business environment for startups and new economy enterprises and, at the same time, providing additional support for the middle class and those most in need,” Kong said.
HKICPA’s suggestions include measures aimed at creating a better living environment for citizens by raising the standard of Hong Kong’s air quality and helping to ease the difficulties faced by citizens due to the unaffordable property prices and high cost of living.
“We call on the government to take further steps to provide immediate relief and to build a better Hong Kong for the long-term, through tax and non-tax measures,” Kong noted.