Will the Dragon Year's budget energise HK's future?

Hong Kong's Financial Secretary, Mr. John Tsang, delivered his final budget address for the current Administration.  His speech attempted to highlight the Government's legacy of stability and growth despite the territory's growing social issues and the uncertain global economic outlook.  But will this year's budget be remembered?

The Financial Secretary provided a revised forecast from the $8.5 billion deficit predicted last year to a far greater $66.7 billion surplus for 2011/12.  The main reason for the turnaround in fortune is the $63.4 billion hike in revenue over the original estimate.  The majority of these increases arose from profits and salaries tax receipts of nearly $30 billion and land sales of nearly $21.1 billion.  The Financial Secretary is predicting the fiscal reserves to be around $662.1 billion by 31 March 2012.

The measures in this year's budget are largely expected with few surprises.  The Government has made a conscious effort to address community concerns.  However, it could be argued it only provides band-aid measures and a lack of vision or strategic planning for the long-term development of Hong Kong.  Such an appraisal does not come as a surprise as this is the final budget of the current Government.  Further, the fiscal reserves as at 31 March 2012 are expected to be a staggering $662.1 billion - 22 months of Government expenditure.  Many in the community will question whether the Government needs to maintain such large fiscal reserves. The Government could have been "bolder" in its approach to painting a long-term picture of Hong Kong's future as a regional business, tourism and cultural centre.

To know more, read our PwC's complete Hong Kong Budget Commentary and key Hong Kong Tax Facts and Figures.