Hong Kong Scraps Property Curbs; Lifts Tax On High Income Earners

(RTTNews) - Hong Kong Financial Secretary Paul Chan on Wednesday scrapped measures intended to cool the property market, and raised the tax on high income earners to plug the hole in the budget.

In the Budget Speech, Chan estimated economic growth of 2.5- 3.5 percent in 2024 after posting an expansion of 3.2 percent in 2023.

The economy is projected to grow by an average of 3.2 percent a year in real terms from 2025 to 2028.

Amid the budget announcements, the Hong Kong Monetary Authority eased conditions related to property mortgage loans.

To help homebuyers, the central bank raised the maximum loan-to-value ratios. The government estimated a consolidated deficit of HK$101.6 billion for 2023-24. Chan proposed a new two-tiered standard rates regime from April with an aim to contain the increase revenue.

Income of up to HK$5 million is proposed to be taxed at 15 percent. Net income exceeding HK$5 million would be subject to a standard rate of 16 percent.

With the new rate, the government revenue is expected rise by about HK$910 million each year.

Chan said the move is expected to affect about 12,000 taxpayers, accounting for 0.6 percent of the total taxpayers. Still the new rates will be lower than those of other advanced economies, he added. Regarding property market, Chan said market sentiment has become very cautious since the middle of 2023 due to rising interest rates and uncertain external environment.

The government decided to cancel all demand-side management measures for residential properties with immediate effect. All additional stamp duties were thus canceled.

Chan said these policies are no longer necessary amidst the current economic and market conditions.

Further, Chan said the government will build Hong Kong as a premier destination for business and tourism. The government allocated around HK$1 billion to support the Tourism Commission in organizing local events and activities.

Elsewhere, the official data today confirmed that the city-state economy grew 4.3 percent in the fourth quarter of 2023, following an expansion of 4.1 percent in the preceding period. On a quarterly basis, GDP gained 0.4 percent in the fourth quarter.