Hong Kong may take ‘year or two’ extra to return to budget surplus amid sluggish economy, reduced land sales: Paul Chan

One attendee, who only identified himself as Kwan, said he was worried the city would be forced to rely on borrowing to sustain public spending in the long run.

But Chan said authorities were taking a “fiscal consolidation” approach to curb spending and that a return to a surplus was on the horizon, but it would take “a year or two” longer than previously expected.

“If you look at this year’s budget, it was estimated that it would occur in 2025-26,” he said. “Now, due to various reasons, such as lower stamp duty and land revenues this year, as well as a soft economy, it may take a little longer.

“We are determined to consolidate our finances and restore a balanced budget within a few years without affecting people’s livelihood, minimising the impact on everyone.”

Chan added that Hong Kong would adopt the global minimum corporate tax initiative, which could bring in additional annual revenue of HK$15 billion from 2026, while hikes in certain government fees and property rates for higher-end residences would ensure further income boosts.

In the budget unveiled last February, the government projected a full-year deficit of HK$54.4 billion for 2023-24. But Chan later conceded the shortfall would likely exceed HK$100 billion.

‘Hong Kong to seek mainland support to expand scale of data coming into city’

The finance chief on Saturday stopped short of providing a new deficit projection, but said government coffers were estimated at about HK$720 billion by 2023-24, more than HK$110 billion lower than the year before.

The government only earned HK$12.3 billion from land-related revenues over a three-quarter period that ended last December, compared with its full-year target of HK$85 billion.

But Chan said the public should not worry about such “short-term” fluctuations that were driven by market demand.

He also promised the government would not cut back on support for those in need under the consolidated spending approach, but expressed reservations about waiving rents for public housing tenants or bringing back the consumption voucher scheme.

Belts may have to be tightened, Hong Kong’s finance chief warns

“Taking into account the financial situation and a gradual return to normality of the economy, the circumstances are now different and the considerations are no longer the same as those in the past,” he said. “We will study this further.”

While the authorities were also looking at potential revenue streams, such as a capital-gains tax, the finance minister stressed that no such policy would be introduced without consulting the public first.

“In reviewing our taxation, we need to also look at our international competitiveness and developments around the world,” he said. ‘If we are making adjustments, we must avoid resulting in a negative [impact] because of an increase [in tax].”