Highlights

From Deficit to Surplus: 2025/26 budget and beyond - Part 2

Has the HKSAR government received sufficient warnings regarding its deficits and bond issues for 2025/26 and beyond, akin to the iceberg warnings given to the Titanic in 1912 and the financial consequences of the Greece's bankruptcy in 2015?

Introduction of the topic

The HKSAR government has announced to issue, inter alia, HKD1.5 billion 30-year infrastructure bonds on 4 June 2025. From 2019 to 2024, among Hong Kong, the UK, Singapore, Macau, and Taiwan, only Hong Kong experienced five years of deficits. For 2025/26, the HKSAR government estimates another deficit and plans to issue bonds of $150 billion. In 1912 in Northen Atlantic, despite receiving six iceberg warnings before 11:40 p.m. on 12 April, the Titanic's Captain Smith did not reduce its speed of 22 knots, believing icebergs could be seen in time to avoid them. This led to the ship sinking less than three hours after a collision with an iceberg, resulting in the loss of over 1,500 lives in Northen Atlantic. Similarly, in 2015, Greece became bankrupt following a period of continuous deficits and government borrowing. The question is whether the HKSAR government has received adequate warnings regarding its deficits and bond issues in the future.

In this webinar, the speaker will examine Hong Kong's GDP, revenue collection, land sales, and deficits, along with their interrelationships and comparisons with other territories, illustrating that the revenue collected by the HKSAR government is insufficient and expenditure spent excessively, by reference to established taxation principles and examples.  The HKSAR government should be able to have a surplus budget from 2025/26 and future years by some means.

The consequences of prolonged deficits and issuing bonds to cover unwarranted expenditures for years are reminiscent of Greece's situation prior to its 2015 bankruptcy, leading to, after the bankruptcy, increased taxation on its people and substantial reductions in medical, education, and social expenditures.

The speaker will also explore why future land sales might not be promising.

Hopefully, the government has received sufficient warnings to the deficits suffered and the consequences of bond issues to prevent Hong Kong people from encountering financial crises in future years.

Speaker(s)

Mr. Godwin Ng

Mr. Godwin Ng has 20 years of experience as a Barrister-at-Law in practice, specializing in tax and civil matters and 40 years as a Certified Public Accountant (CPA). His extensive tax experience includes tax litigation in court, delivering tax seminars on offshore income, capital gains, cross-border transactions and tax investigations, as well as providing tax education. He authored commentary on Board of Review (Inland Revenue) Decisions in Asia-Pacific Journal of Taxation, co-published by the School of Accounting and Finance of Hong Kong Polytechnic University and the Taxation Institute of Hong Kong.  Over many years, he has contributed to recommendations on budget proposals through his involvement in various professional associations. Previously, he served the tax profession as Vice President of the Taxation Institute of Hong Kong. He holds an LLB from University of London, a PCLL from the University of Hong Kong, and an MBA (Financial Services) from Universities of Wales/Manchester.