Members of C15+ met with the media after submitting their proposals for the 2024-25 Budget to Financial Secretary Paul Chan Mo-po on Jan 22, 2024. (LI XIAOYUN /  CHINA DAILY)

The upcoming 2024-25 Budget should remove the long-standing property cooling measures to revive the flagging housing market and cut expenditure on some major projects to reduce fiscal deficit, members of C15+, a Hong Kong lawmaker alliance, suggested to Financial Secretary Paul Chan Mo-po on Monday.

“Swift and comprehensive” removal of the existing cooling measures should be actioned, Doreen Kong Yuk-foon, a member of the Legislative Council, advocated, as “there is no speculative behavior across all property types, including residential, commercial, and industrial buildings”.

To increase fiscal revenue, Kong said she believes the government should set up new long-term mechanisms, with tax system reform and expanding the tax base at their core

According to the Rating and Valuation Department, Hong Kong’s home prices dropped to a seven-year low in November as soaring mortgage rates dampened people’s willingness to buy homes. The Special Administrative Region government in October withdrew some property cooling measures, including exempting owners from paying an additional 10 percent stamp duty when selling their property after holding it for two years instead of the previously stipulated three years, and halving the buyer’s stamp duty and new residential stamp duty from 15 percent to 7.5 percent.

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In the light of an estimated fiscal deficit of HK$100 billion ($12.79 billion), Kong also suggested the government should take a prudent approach towards investment in large-scale projects with high costs and low short-term returns, emphasizing the importance of assessing their economic and social benefits.

Against the backdrop of the fiscal deficit, there are concerns about the progress of two of the government’s focal projects —  the Northern Metropolis and Lantau Tomorrow. Lawmaker Jesse Shang Hailong said a sequential approach should be adopted, prioritizing the development of the Northern Metropolis before planning for Lantau Tomorrow, as promoting the projects simultaneously would exacerbate the government’s fiscal pressures, and a portion of resources should be allocated to key sectors such as healthcare and education.

However, Andrew Lam Siu-lo, another member of C15+, said that despite being in the early stages of research, the development of Lantau Island should not be suspended, since such action would further erode investor confidence. 

To increase fiscal revenue, Kong said she believes the government should set up new long-term mechanisms, with tax system reform and expanding the tax base at their core. However, she added measures that could dampen economic growth or investor confidence, such as increasing corporate taxes and levying capital gains tax, should be avoided. 

Echoing Kong’s views, lawmaker Johnny Ng Kit-chong said he opposes the imposition of any new types of taxes, such as arrival tax and crypto stamp duty.

READ MORE: Property sales in Hong Kong down 2.7% in 2023

Lam suggested that the amount of bond issuance should be raised to 15 percent of the city’s gross domestic product over the next three years, as another way to increase fiscal revenue.

Contact the writer at irisli@chinadailyhk.com