Hong Kong won’t impose departure tax, says finance chief

Bloomberg
Updated ·2-min read
Travelers at Hong Kong International Airport. Photographer: Lam Yik/Bloomberg
Travelers at Hong Kong International Airport. Photographer: Lam Yik/Bloomberg

By Alan Wong and Haslinda Amin

(Bloomberg) — Hong Kong Financial Secretary Paul Chan said he has no plans to impose a departure tax on residents, rejecting a proposal aimed at easing the government’s widening deficit.

“I don’t think it’s something good for Hong Kong,” said in an interview with Bloomberg TV at the World Economic Forum in Davos on Wednesday.

The pro-business Liberal Party made the proposal last week. Hong Kong residents are traveling to neighboring Shenzhen and other mainland cities in record numbers to shop and dine, sparking concern from the local retail and service sectors. Hong Kong leader John Lee previously said the government welcomes more cross-border travel but didn’t directly comment on the proposal when asked by reporters.

Separately, the financial chief said he sees no conditions for the city to impose capital gains tax in the short term, Sing Tao Daily reported on the same day, citing an interview.

Chan is set to announce his budget for the 2024-2025 financial year next month. He’s tasked with reviving a stagnant economy hurt by weak demand in China and geopolitical tensions. He warned in December that the city could face a deficit of more than HK$100 billion ($12.8 billion) for the current year, double the HK$54.4 billion he initially forecast.

Hong Kong has struggled to regain its appeal as a global travel destination since the city reopened in March last year from its self-imposed Covid isolation.

Visitor numbers have risen but still trail pandemic levels. Visitor arrivals from mainland China — the biggest source of tourism — are about one-third lower than before the pandemic. China’s economic slump and weak currency are also weighing on consumption in Hong Kong.

Latest official data shows a stagnant retail sales recovery in Hong Kong, which peaked in April at 88% of the 2018 level and was at 87% in November. A fragile recovery of growth in China and a downturn in Hong Kong’s property market were major drags.

Chan said in the interview he expected Hong Kong’s economy to improve this year on expected cuts in interest rates and a stabilizing Chinese economy. His government will keep the local real estate market “healthy” and its development in line with economic growth, he said.

Chan left for Davos on Sunday night to attend the annual week-long World Economic Forum meeting. He has met with political and business leaders in a bid to drum up tourism and attract more global capital to the financial hub.

©2024 Bloomberg L.P.

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