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The Hong Kong Institute of Certified Public Accountants welcomes 2020-21 Budget relief measures to mitigate negative impact of new challenges

26 February 2020

(Hong Kong, 26 February 2020) In response to the 2020-2021 Budget, the Hong Kong Institute of Certified Public Accountants (HKICPA) welcomes the HKSAR Government’s 2020-21 Budget announcements, especially the one-off relief measures intended to help the Hong Kong public mitigate the negative impacts of the coronavirus outbreak, the aftermath of last year’s social unrest, and the US-China trade tensions. 

Commenting on the 2020-2021 Budget, Mr Johnson Kong, President of the HKICPA, said: “The Financial Secretary expects a deficit of about HK$139.1 billion next year, which is around 4.8% of GDP. If the one-off income and relief measures are removed from the equation, the deficit would be about 2% of GDP, which would still be within international norms (generally not higher than 3%).” 

“Despite the urgency of the additional expenditures to mitigate the negative impact of the Covid-19 outbreak, government spending is still controlled. Hong Kong’s financial reserves should remain sufficient to support these counter-cycle stimulus measures. Overall, we welcome the government’s intention to put money back into people’s pockets amid these challenging times.” 

The aftermath of last year’s social unrest and this year’s coronavirus epidemic is wreaking havoc on the Hong Kong economy, and is now affecting almost all members of society. The HKICPA therefore finds the HK$10,000 cash handout scheme, in which Hong Kong permanent residents aged 18 years and above will benefit, an understandable and reasonable response. However, not all beneficiaries need the assistance, so those who are not in need of the cash assistance should consider donating the money to those in greater need.

Mr. William Chan, Deputy Chair of the HKICPA’s Taxation Faculty Executive Committee (“TFEC”), said: “We believe the HK$10,000 cash handout scheme can help relieve some of the economic pressure on the public caused by the Covid-19 outbreak. We hope that the cash will be distributed as soon as possible with minimal red tape and obstacles. We would encourage recipients to spend the money in Hong Kong as a way to boost the local economy, especially in the distressed sectors, such as food and beverage (F&B) and retail.” 

The HKICPA believes that the relief measures will result in multiple benefits to certain groups of the community. Mr So Kwok Kay, the TFECs’ Past Chairman, said: “The general public is set to benefit from a raft of relief measures such as cash handouts, tax rebates and rates waivers. Meanwhile, social security recipients will receive an additional month’s allowance, and public housing tenants will benefit from one month’s rental subsidy. Having said that, we would hope that the government will provide more support for the so-called ‘n-nothing’ households through the Community Care Fund.” 

The fiscal deficit projected for next year is within the expectations of the HKICPA, and is in a large part a result of the one-off relief measures. Despite the large deficit, Hong Kong's ample fiscal reserves allow it to undertake this fiscal stimulus. Nonetheless, in the medium term, recurrent revenue is expected to fall short of recurrent expenditure over the next five years, resulting in a structural deficit on the operating account. 

Therefore, the HKICPA urges the government to increase and diversify revenue sources and keep its expenditure in check, to maintain fiscal stability. 

Mr So added: “We are concerned about Hong Kong’s financial situation in the medium- to long-term. The government should explore new revenue streams, to stimulate economic growth, improve the tax system structure, and broaden the tax base. On the expenditure side, the demands on government spending will keep increasing due to population ageing. The government should explore means to control public spending without compromising the quality of public services.”

The HKICPA has long been advocating a systematic review of Hong Kong’s tax system; and acknowledges the fact that the government has responded to the recommendations made by the HKICPA, and will be canvassing opinions from economists, experts and the wider business community. Efforts should be made to ensure Hong Kong’s tax system is compatible with international tax developments. The HKICPA believes that these endeavours will have positive effects on Hong Kong’s tax- and business-friendly environment. 



經濟環境嚴峻 香港會計師公會認為財政預算案有助紓困