People wear face masks as they visit a promenade on the Kowloon side of Victoria Harbour, which faces the skyline of Hong Kong Island, in Hong Kong on July 13, 2020. (ANTHONY WALLACE / AFP)
Deficit-troubled Hong Kong government is expected to gain an extra HK$12 billion in revenue each year once the 30 percent increase in stamp duty on stock transactions is implemented from August 1, the government said on Thursday.
The extra revenue in the 2021/22 fiscal year from August 2021 to March 2022 will be about HK$8 billion, Secretary for Financial Services and the Treasury Christopher Hui Ching-yu told a news conference.
In the latest budget announced on Wednesday, the financial chief announced a rise in stock stamp duty to 0.13 percent from 0.1 percent, payable by buyers and sellers respectively
In the latest budget announced on Wednesday, the financial chief announced a rise in stock stamp duty to 0.13 percent from 0.1 percent, payable by buyers and sellers respectively.
Hui stressed that the sole purpose of the move is to increase government revenue at a time when it faces a record budget deficit of HK$257.6 billion (US$33.22 billion) this year.
Hong Kong faces a budget deficit for three successive years, with the deficit in the next fiscal year expected to reach HK$101.6 billion, accounting for 3.6 percent of GDP, due to the countercyclical fiscal measures and the continued increase in recurrent expenditure, Financial Secretary Paul Chan Mo-po said.
Hong Kong’s stock market on Wednesday saw the biggest sell-off since May last year after the stamp duty rise was announced, with the Hang Seng Index slumping almost 3 percent to 29,718 points.
On Thursday, the benchmark index climbed 1.2 percent to close at 30,074 points, as investors and traders saw a limited impact of the stamp duty hike.
The special administrative region government believes Hong Kong remains an attractive market for global investors despite the increase in stamp duty, for its diversified companies and investment products, Hui said.
“We compete on quality, and also we compete on the liquidity of our market…it (stamp duty) is just one of the many factors,” he said.
Fluctuations in the stock market result from a variety of reasons, and the stamp duty only accounts for a small part of investors’ costs, Hui said. He said the government finalized the plan with no backups.
The government will strive to enhance the stock market’s appeal through measures such as a review of the secondary listing regime to attract more companies, and an expansion of the Stock Connect scheme with the Chinese mainland on exchange traded funds and other assets, Hui noted.
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