PwC Predicts That SAR Budget Deficit Will Last For Three More Years

by Mary Swire, Tax-News.com, Hong Kong

09 January 2002

Despite offering a more optimistic estimate than Chief Executive Tung Chee-hwa of the size of this year's revenue shortfall ($40 billion to his $60 billion), international accounting firm PricewaterhouseCoopers predicted earlier this week that the Hong Kong government would run a deficit budget for at least another three years.

Speaking on Monday, PwC's Hong Kong Senior Partner and Head of Tax Services, Rod Houng-Lee revealed that in a recent survey of senior financial directors and managers conducted by the accounting firm, 65% of respondents believed that the budget deficit was structural rather than cyclical.

These findings support the growing demand for an increase in the size of the SAR's tax base, and a reduction in the jurisdiction's reliance on high property taxes. However, despite overwhelmingly expressing the belief that the tax base is too narrow, only 21% of respondents favoured new taxes, and a mere 5% supported the idea of a tax increase.

Mr Houng-Lee suggested that these results either showed 'a very low level of understanding' of the possible solutions, or that the Hong Kong community is 'burying its head in the sand in the hope that the government will get its own house in order by cutting expenditure first.'

Recommended