Hong Kong will no longer rely heavily on land sales as the government’s major source of income, the city’s finance chief has said, even as lawmakers contend that the revenue stream is “irreplaceable”.
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Financial Secretary Paul Chan Mo-po’s remarks in a legislative meeting on Thursday were in response to calls from lawmakers to make land bidding exercises more attractive to developers, a day after he announced in the budget that authorities would not sell commercial parcels in the coming year.
Chan said the government should reduce its dependence on land revenues and prioritise ensuring sufficient supply as well as access to affordable and quality housing for residents.
“In the past, the land premium was one of the government’s main sources of revenue, supporting development in other areas. But it also led to an insufficient land supply and skyrocketing housing prices, putting a lot of pressure on people’s livelihoods,” Chan told lawmakers during a financial committee meeting in the Legislative Council.
“The government no longer wants to be overly dependent on land sales income. Instead, it is more important to grow the revenue from developing the economy, through profits tax and salaries tax.”
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In Wednesday’s budget address, Chan said the government would only roll out eight residential sites in the coming financial year. He attributed the decision to the high vacancy rates of offices in recent years with the relatively ample supply.
The decision was made against the HK$87.2 billion deficit (US$11.2 billion) for the current financial year and a nearly 60 per cent drop in land revenue from the original estimate of HK$33 billion to HK$13.5 billion in 2024-25.