Financial Secretary John Tsang will estimate how much money the government will make next year, as well as how much it needs to spend. He’s been wrong for the past few years.
In 2011, an unnamed government official pointed out a big problem with bad estimates: when the public sees a big surplus and not a lot of long term spending, they want some of that money back. That was the year when the government just gave out HK$6,000 to all of Hong Kong’s six million adult permanent residents. Francis Lui Ting-ming, professor of economics at the University of Science and Technology, said many people would now expect continuing handouts.
You can use the budget to get an idea of which government agencies are hiring more people. Think of it as the government’s shopping list for the coming year. The government releases a list of establishment numbers, which lists how many posts the various departments have, as well as an estimate of how many the departments will have at this time next year.
Most of the government’s revenue comes from profits tax. Basically, if you do any kind of trade, profession or business that makes a profit in Hong Kong, you have to pay taxes. It doesn’t matter if you live here or not. The rate for businesses is 16.5 per cent.
This year, the government cut profits tax by 75 per cent, and people who pay profits tax can save up to HK$20,000.
Hong Kong has to compete against mainland cities like Shanghai and Beijing for business, as well as regional rivals like Singapore. The mainland cities get a lot more revenue from profits tax than Hong Kong does, but accounting firm Deloitte says the government should think about setting up a two-tier tax system by taxing the first HK$2 million in profits at a lower rate of 12 per cent – the kind of system Singapore has.
This is just kind of cool. The budget tells you much money the Hong Kong Government collected for the past year. Let’s see how it compares to Hutchison Whampoa, the multinational company chaired by Li Ka-shing, Asia’s richest man.
2009 was a tough year. At that year’s budget announcement, financial secretary John Tsang pointed out that Hong Kong, like the rest of the world, will see its economy go down. The 2010 budget announcement notes that “Amidst the severe plunge in global trade, Hong Kong’s goods exports fell by 12.6 per cent in real terms in 2009, the biggest annual drop on record.” Hutchison Whampoa also suffered that year because of significantly lower oil and gas prices, less trade and unfavourable exchange rates.