'Fiscal balance is clear target'

February 26, 2025

Financial Secretary Paul Chan:

Our guiding principle is that in considering any revenue measures, particularly tax-related measures, we have to pay regard to the following considerations. One is the competitiveness of Hong Kong in terms of attracting investment and talent. Secondly, if we are to increase revenue, we (will) try to minimise the impact on the average citizen. So that is the guiding principle we have. 

And at the moment, we have no intention to introduce any form of GST (goods & services tax) or sales tax. We do think that we have put up a very credible, physical consolidation plan. On the one hand, we increased some revenue, (yet) the measures will not impair our competitiveness. But more importantly, we try to cut down the expenditure growth of the Government as the major means to achieve fiscal balance. 

That is why, in the coming few years, up to 2027-28 cumulatively, we will be able to slash public government expenditure by about 7% and also cut the (civil service) establishment. So we do believe we have a plan. We have specific steps moving towards the right direction to achieve balance.

Financial Secretary Paul Chan today said that by putting up a fiscal consolidation programme in the 2025-26 Budget, the Government is taking specific steps towards the right direction of achieving fiscal balance.

At the Budget press conference this afternoon, Mr Chan pointed out that the consolidation plan is able to increase government revenue without impairing the city’s competitiveness. Moreover, expenditure growth is contained in order to reach fiscal balance.

“That is why, in the coming few years, up to 2027-28 cumulatively, we will be able to slash public government expenditure by about 7% and also cut the civil service establishment.”

Separately, the finance chief remarked that the Government has no plan to introduce any form of goods and services tax, or sales tax. As he responded to reporters’ questions, he also explained the Government’s considerations when formulating revenue measures.

“One is the competitiveness of Hong Kong in terms of attracting investment and talent.

“Secondly, if we are to increase revenue, we will try to minimise the impact on the average citizen.”