CENTRAL: The massive projected surplus, at least seven times the original estimate of HK$16.3 billion for 2017-18, has reignited criticism of officials’ conservative calculations, and the resultant failure to invest in things like public hospitals and helping the elderly and the young. Experts chastised officials for taking what they called a doom-and-gloom outlook and forecasting a fiscal structural deficit by 2021. One economist said the problem was the exact opposite, with the city facing a structural surplus. With such resources at his disposal, pressure is piling on Financial Secretary Paul Chan Mo-po to give one-off relief measures when he delivers his annual budget on February 28. While big accounting firms had predicted that the surplus – that is, a positive difference between the government’s income and its outgoings – this year might be between HK$160 billion and HK$180 billion by the end of March 2018, a source familiar with the fiscal position predicted a final figure just below that range. Hong Kong has been experiencing the biggest structural economic growth and it is because of China,” said Franklin Lam Fan-keung, founder of think tank HKGolden50 and a former investment bank analyst who served the government’s Central Policy Unit during the Asian financial crisis of 1997. Official statistics show the average annual growth rate of the government’s revenue from 2009-10 to 2014-15 was estimated at 6.2 per cent in government budgets. Looking back, the actual growth rate was 8.5 per cent, while the corresponding figure for expenditure was 6.8 per cent. Chong noted a recent structural change in stamp duty. He said he expected its growth to continue to expand in coming years, making the duty paid on property and stock purchases the biggest source of government income and further driving up its total revenue.
“The problem of structural deficit would already be resolved if the additional income from stamp duties would cover the extra expenditure triggered by the ageing issues,” he said, adding that 9.4 per cent growth in stamp duty was a very conservative estimate as policies such as the stock connect and the introduction of dual-class technology stock listings would further fuel its growth.
Liu said it was difficult to make a reliable forecast of land revenues, and that the property cooling measures also boosted stamp duty income.
