Hong Kong’s finance chief should “cautiously manage” expenditures to ensure economic development rather than eliminate tax incentives that stimulate investment, a prominent business group has said.
The Hong Kong General Chamber of Commerce on Tuesday also called for the creation of a digital services duty to create a level playing field for local businesses while also raising tax revenues, as part of a raft of proposals for the coming budget.
Financial Secretary Paul Chan Mo-po on February 26 will deliver his budget speech for the 2025-26 financial year in which he is expected to announce cost-cutting measures to tackle the city’s projected deficit of nearly HK$100 billion (US$12.8 billion).
The finance chief has previously said that while the city aimed to maintain its competitive advantage of a simple and low tax system, the government will focus on cost-cutting rather than seeking new sources of income.
Chamber chairwoman Agnes Chan Sui-kuen said that government policy had shifted to a period of “fiscal consolidation” after years of using expansionary expenditures to boost the city’s post-pandemic economic recovery.
But Chan added it was important that the government “cautiously manage” expenditure controls to avoid impeding the city’s economic development.
“We need to continue some of these incentives,” Chan said. “Some of these incentives are still important to allow for economic development and to bring in more businesses.”
