The new Budget will be presented this Wednesday (Feb. 24). Financial Secretary Paul Chan revealed in a blog post that the budget will propose an enhanced "fiscal consolidation" strategy aimed at strictly controlling public expenditure, moderately increasing revenue, accelerating development, and investing in the future.
Facing a deficit nearing HK$100 billion last year, Chan previously indicated that there is room for cuts in education and healthcare spending. Several Legislative Council Members noted that fees for medical services and recreational facilities have not been adjusted in years, suggesting potential changes based on the "user pays" principle. Reports also indicate that the government plans to raise taxes for high-income earners for the second consecutive year.
Aan ocean of chances
Chan mentioned that the budget cover will feature a lake blue color, symbolizing an ocean of opportunities for future development and a strong foundation for high-quality economic growth. He expressed confidence in the future, despite challenges, supported by the nation and collective efforts from Hong Kong society.
The emphasis on effectively utilizing public resources is seen as crucial for sustainable development and continuous improvement in quality of life. According to Chan, the new Budget will outline a reinforced fiscal consolidation strategy that maintains and enhances public services while controlling spending, considering Hong Kong's competitiveness and the "user pays" principle.
Chan also highlighted the importance of seizing future development opportunities, particularly in technology and innovation, to drive economic growth and transform traditional industries.
A better way to tax the rich
LegCo Member Michael Tien pointed out that fees for public hospitals and leisure facilities have not been adjusted for years, suggesting that adjustments might be made under the "user pays" principle.
Rebecca Chan, member of LegCo's Panel on Health Services, expressed concern about increasing medical demand, noting that cutting healthcare spending has not been tried before, making significant reductions unlikely. However, she believes the government will push the Hospital Authority to effectively manage expenditures, potentially through technology to ease the burden on healthcare workers.
Recently, there have been reports of adjustments to the HK$2 public transport subsidy. While the age threshold for eligibility will remain at 60, there will be a cap of 240 rides per month (averaging 8 rides daily), with a new requirement for users to pay 20% of fares over HK$10.
Regarding the Public Transport Fare Subsidy Scheme, the Budget for 2023/24 was around HK$3.5 billion, more than double the expenditure in 2019/20. Previous budget proposals have called for a review of the scheme's operational model, but many legislators expect no changes to this plan in the upcoming Budget, saying that would significantly impact most citizens' welfare and could generate negative feedback while offering minimal savings.
On the revenue side, there are reports that the government intends to raise taxes on high-income individuals, commonly referred to as the "rich people's tax," for the second consecutive year. The tax association has previously suggested increasing the standard tax rate from 16% to 17% for those with incomes exceeding HK$5 million.
Overall, while many legislators do not oppose raising the "rich people's tax," there are concerns about lowering the income threshold, which would bring more individuals into the highest tax bracket. Johnny Ng, member of LegCo's Panel on Financial Affairs, stated that the impact of the "rich people's tax" would affect a relatively small number of taxpayers, and he would not oppose it if addressed in the budget. However, Rebecca Chan raised concerns that adjusting the tax brackets could negatively impact middle-class families, who already face substantial monthly expenses with limited government support, and she would not support such changes.
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