Hong Kong's Financial Secretary Warns Of Tax Increases

by Mary Swire, Tax-News.com, London

09 July 2002

In an interview with a locally-based cable television station, Hong Kong's Financial Secretary, Antony Leung Kam-chung revealed that unless they can find other ways of slashing the jurisdiction's fiscal deficit, the SAR authorities may be obliged to 'adjust fees and taxes in a big way'.

Speaking to Cable TV at the weekend, Mr Leung announced that the government needs to bridge a deficit gap of HK$ 9 billion in the next three to four years. He went on to explain that this amount represents around 4% of the government's total expenditure, 'which is not a lot', but said that nevertheless, in the absence of any other viable alternative, tax hikes would become necessary.

Although the Financial Secretary hinted during the interview that direct taxes - such as salary taxes - could be targeted, he declined to give any more detail.

Meanwhile, around 30,000 civil service and public body employees took part in a protest march at the weekend against the pay-adjustment bill, which is set to receive its second reading on Wednesday.

The large civil service wage packet has been blamed in the past for exacerbating the SAR's financial woes, and the government announced on Sunday that the rally has not affected its resolve to push the pay cut legislation through.

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