The Budget Speech emphasizes fiscal consolidation, expenditure control, and increasing revenue to ensure the sustainability of public finances in Hong Kong. The Government aims to reduce government expenditure by 2% annually, cut civil service establishment by 2% in 2026-27 and 2027-28, and adjust transport subsidies to save $6.2 billion over five years. It also proposes to bring back unspent seed capital funds and reduce construction costs for infrastructure projects. Efforts are being made to enhance public service efficiency through digital transformation and various new technologies. Revenue will be increased through adjusted fees and charges, a boundary facilities fee, and a global minimum tax on large multinational enterprises.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Reinforcing Fiscal Consolidation Programme
The key principles of the Government's Fiscal Consolidation Programme include stringent control over government expenditure, maintaining the competitiveness of Hong Kong's tax regime, and upholding 'user pays' and 'affordable users pay' principles. The goal is to manage expenditure growth, optimally use fiscal resources, and identify new revenue sources.
Containing the Growth of Government Expenditure
To address the growth of government expenditure, the Productivity Enhancement Programme will increase the rate of reduction of recurrent expenditure from 1% to 2% by 2025-26, resulting in significant savings. The civil service establishment will be reduced by 2% in the subsequent two years, with around 10,000 posts expected to be deleted over the term. Funding for UGC-funded universities will also see a 2% reduction annually over three years, totaling $68.1 billion in savings.
Adjusted Transport Subsidy Schemes
The Public Transport Fare Concession Scheme for the Elderly and Eligible Persons with Disabilities will transition to a '$2 flat rate cum 80% discount' scheme, limiting trips to 240 per month. The Public Transport Fare Subsidy Scheme threshold will be raised to $500 per month, saving $6.2 billion over five years.
Assisting in Reducing Expenditure
The Government has requested workshops and reviews by the Audit Commission, Financial Services and Treasury Bureau, and relevant bureaux to foster fiscal prudence, improve procurement, and review expenditures on social welfare, healthcare, and education.
Pay Freeze for 2025-26
All executive authorities, the legislature, judiciary, and members of the District Councils are expected to take a pay freeze for the 2025-26 financial year.
Capital Works Expenditure
The Government aims to improve cost-effectiveness in infrastructure projects, with the Project Strategy and Governance Office ("PSGO") supporting departments in enhancing project governance, reducing costs by 15% across 540 projects, and exploring new materials and technologies. Anticipated savings of at least $40 billion are expected in district cooling systems.
Consolidating and Optimising Government Financial Resources
Seed capital funds worth $62 billion and the remaining Anti-epidemic Fund balance of $15 billion will be brought back to the Government's accounts in 2025-26.
Enhancing Public Service Efficiency
The Government is working towards a 'single portal for online government services' with 'iAM Smart', connecting over 3.2 million users to 600 electronic forms. Digital Corporate Identity Platforms and various electronic licensing services will be implemented, while smart estate management and public works digitalization are being advanced.
Increasing Revenue
The Government plans to adjust government fees and charges, including an increase in air passenger departure tax from $120 to $200 per passenger, application fees for various schemes to $600, and reviews of tunnel tolls and licensing fees. Additionally, a boundary facilities fee on private cars, global minimum tax on large multinational enterprises, and a Hong Kong minimum top-up tax are being considered to increase revenue.
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