Budget Speech
Revised Estimates for 2022-23
182. Last year, Hong Kong's economy was plagued by the epidemic. Meanwhile, the sharp tightening of monetary policies by central banks across the globe has significantly weakened the external economic momentum with adverse impact on the local economy. Government revenue has fallen short of expectation, and the revenue from profits tax in this financial year will be lower than the initial estimate. The sluggish stock and property markets have led to lower-than-expected revenue from stamp duty. The weak property market also has a bearing on revenue from land premium. With the massive expenditure incurred by the 2022 Employment Support Scheme launched after the announcement of the last Budget and the anti-epidemic measures taken last year, the financial position of this financial year was worse than expected. Although we have reduced the expenditure on anti-epidemic measures in a timely manner having regard to the subsiding epidemic situation during the year, it is estimated that a deficit of about $140 billion will be recorded, higher than the original estimate of about $56 billion. Our fiscal reserves will fall to about $820 billion.
183. The 2022-23 revised estimate on government revenue is $603.8 billion, lower than the original estimate by 15.7 per cent or $112.1 billion. This is mainly because revenues from land premium and stamp duty are lower than their previous estimates.
184. Revenue from land premium is $71.1 billion, substantially lower than the original estimate by $48.9 billion, mainly due to the lower-than-expected transaction prices of some land lots and the cancellation of some land sales. Revenue from stamp duty of $67 billion is lower than the original estimate by $46 billion, and is also far lower than the previous year. This is mainly because of the sluggish property and stock markets and the decreased volume of transactions. Revenue from profits tax is $162 billion, which is lower than the original estimate by $5.7 billion, mainly due to an increase in the amount of holding over of provisional tax given the difficult economic environment last year. Revenue from salaries tax is $75.7 billion, which is $2.8 billion higher than the original estimate. This is mainly because of an increase in pay level.
185. Due to the huge expenditure involved in the implementation of massive counter-cyclical measures and anti-epidemic work, the revised estimate of total government expenditure for 2022-23 at $809.6 billion increased significantly by 16.8 per cent compared to the previous year. Its ratio to nominal GDP is projected to rise to 28.6 per cent, 0.3 per cent or $2.3 billion higher than the original estimate.
186. All in all, I forecast a consolidated deficit of $139.8 billion for 2022-23. Fiscal reserves are expected to be $817.3 billion by 31 March 2023.
187. The civil service establishment maintained a zero growth in this financial year. Departments have enhanced effectiveness and efficiency through reprioritisation, internal redeployment and streamlining of work processes, so that various new policies and initiatives of the Government can be taken forward with the civil service establishment maintaining at the present level.
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