On 22 February 2017, the Honourable John C Tsang, Hong Kong Financial Secretary, delivered his ninth Budget Speech to the Legislative Council.
On 22 Feb, the Honourable John C Tsang delivered his 9th Budget Speech to the Legco.
The Financial Secretary, the Honourable John C Tsang, presented his ninth Hong Kong Budget speech on 24 February 2016. In terms of overall economic performance in 2015, the Financial Secretary reported a headline inflation rate of 3 percent, with the underlying inflation rate at 2.5 percent. Looking ahead, he forecast that the headline inflation rate for 2016 will be 2.3 percent, with the underlying inflation rate at 2 percent. The Financial Secretary also announced an overall budget surplus forecast of HKD 30 billion for 2015/16.
The Budget speech reflects in many ways a ‘business as usual’ approach, with few substantial new or longer term initiatives introduced or flagged. One-off relief measures such as reductions in Profits Tax and Salaries Tax payable for 2015/16, increases in personal allowances, and waivers of rates and fees continue to be a recurring theme. Particular industries highlighted for additional/specific support included the tourism industry.
The Financial Secretary also discussed what he described as the ‘New Economic Order’. In his view, key to embracing this is nurturing innovation, and he highlighted a series of achievements and future initiatives. He also mentioned KPMG as being one of the international firms which have chosen to establish laboratories and incubation programmes in Hong Kong. Unfortunately, however, the proposals stopped short of where certain other jurisdictions have particularly headed, for example, in the case of tax incentives for research and development activities.
While many of the one-off or short-term measures are welcome, there continues to be little in the way of obvious long-term/strategic focus on the part of government. The key exceptions to this are the Housing Reserve set up in support of public housing development, the HKD 200 billion set aside for the 10-year hospital development plan, and the Future Fund. All of these are positive moves. On a separate note, we look forward to the government’s early implementation of the few new matters raised, as well as those raised in prior years.
Download the Budget Summary to find out more.
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KPMG partners Michael Olesnicky and Stanley Ho discuss key highlights from the Hong Kong Budget and share KPMG’s view on the proposed set-up of a Tax Policy Unit