The Hong Kong government is reviewing public service charges and user-pays fees to raise revenue and reduce long-term infrastructure investment. This is in response to a larger-than-expected deficit of over HK$110 billion in the 2023-24 fiscal year, caused by heavy pandemic-related spending. In addition of a sluggish property market, revenue from stamp duty, land sales, and share transactions fell short of estimates at the beginning of the year.
What’s next?
Moving forward, Financial Secretary Paul Chan Mo-po aims to consolidate public finances, reduce expenditures, and increase revenue to restore balance. The government plans to carefully evaluate the affordability for different social classes and the operating conditions of various industries during this process. The review will focus on charges for public services that have not been adjusted for a long time and those based on the user-pay principle, which currently do not recoup costs.
What public service charges could be raised?
Economists suggest that some charges and fees, such as those for using government sports facilities, registering a business, and operating a vehicle, could be raised as they have remained unchanged for a significant period.
Water charges: The charges for water, priced at up to HK$9.05 per cubic metre, have been frozen since 1995.
Admission and hire charges for venues under the Leisure and Cultural Services Department: These charges have remained unchanged since 2013. For example, booking an air-conditioned basketball court costs between HK$60 and HK$148 per hour, depending on the time.
Public healthcare charges: These charges were last adjusted in 2017. For attending an accident and emergency unit, the fee is HK$180.
Although public service charges account for only 4% of the projected HK$543 billion revenue for the next fiscal year. It is the less complicated way to increase government revenue without complicating the simple tax system for which the city is famous.
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