Hong Kong urged to explore new revenue strategies

CPA Australia suggests raising fines and penalties and raising tobacco duties from the current 65%.

Hong Kong should explore innovative revenue generation strategies whilst optimising public expenditure, CPA Australia said.

CPA Australia recommended expanding the user-pays model across a wider range of government services to ensure that fees remain affordable to the public.

To enhance government revenue, CPA Australia suggests several measures, including raising fines and penalties, such as increasing illegal parking fines and raising tobacco duties to the World Health Organization recommended 75% from the current 65%.

Additionally, they propose introducing new taxes, such as a digital services tax targeting large digital providers and a carbon tax aimed at major greenhouse gas emitters.

Attracting foreign investment is another crucial area of focus. To encourage investment funds and family offices to choose Hong Kong, CPA Australia proposes enhancing tax regimes by expanding tax exemptions for local real estate investments under the unified fund exemption and single-family office concession regimes.

They also suggest a 50% stamp duty reduction for first-time homebuyers, which could stimulate the property market and provide financial relief to young buyers.

For small and medium-sized enterprises, they recommend increasing the threshold for the half profits tax rate from $2m to $3m and offering a 100% tax rebate on the 2024/25 final profits tax, capped at $10,000.

To address workforce shortages, CPA Australia suggests introducing incentives for hiring older workers, such as providing an additional tax deduction on salaries paid to employees aged 60 or above or offering direct wage subsidies for eligible older employees.