The finance chief has proposed taxing the Hong Kong Jockey Club an extra HK$2.4 billion annually for the next five years to boost government income, amounting to a total of HK$12 billion.
The proposal was introduced to the Legislative Council on Wednesday as Financial Secretary Paul Chan delivered his speech on the government’s budget for the upcoming fiscal year.
Chan revealed that the government had a deficit of HK$140 billion in 2022-23 and suffered a drop in income due to underperforming land sales and stock market.
“In the face of fiscal pressure, we must seek ways to increase government revenue in the short term,” Chan said.
The financial secretary then suggested taxing the Hong Kong Jockey Club (HKJC) HK$2.4 billion annually as a “special football betting duty” for five years from 2023-24, on top of its current betting duties.
Chan said the government had given “due consideration” to the competition faced by the HKJC from outside of the city. “The HKJC has also undertaken that the proposal would not reduce its commitment to local charities,” he added.
In response, the HKJC said in a statement released shortly after Chan’s announcement that it “understands the rationale” behind the newly proposed tax.
The club said while the special duty would result in a “substantial reduction in income,” its charities trust “will not reduce its regular charity donations to the community, which amounted to HK$4.5 billion in 2021/22.”
Meanwhile, the betting organisation urged the authorities to reduce regular betting duty rates in the long term, saying the horse-racing duty currently stood at 72 to 75 per cent, or among “the highest in the world.”
“Any permanent hike in betting duty rates will create structural problems irreversibly damaging the Club’s successful integrated business model and continued competitiveness, while benefiting only illegal and offshore betting operators,” the statement said.
When asked about HKJC’s response to the proposed tax, Chan said when meeting the press on Wednesday afternoon that “not many people like to pay more tax.”
“They can have their reactions, and we will do what we have to do,” he said.
The finance secretary added that he wanted to increase government revenue and reduce the number of impacted areas as much as possible.
He said that was why the government settled on imposing the special tax on HKJC instead of raising salary or profit taxes, saying “I think it can afford that.”
Asked how a balance could be struck between increasing the government’s tax revenue and meeting the wishes of HKJC, Regina Ip, chairwoman New People’s Party did not give a direct answer.
She said HKJC produced increasing revenue from betting in recent years, especially football betting. The institution also saw a surplus from its charity foundation, amounting to some HK$40 billion. It failed to provide statistical proof to back its argument that its income would drop, the lawmaker said.
“I really don’t see the logic. They have not provided any quantitative evidence for their forecast,” she said.
No change to salary and profit tax
Meanwhile, the finance chief said he would not make adjustments to the salary and income tax rates this year to help maintain Hong Kong’s “long-standing advantages” in its tax system and stay in line with the government’s policy of attracting companies and talents.
With the new source of income, Chan predicted the total government revenue for 2023-24 would be HK$642.4 billion, leaving the government in a deficit of HK$54.4 billion.
After taking into account the proceeds from the issuance of bonds and repayments, Chan forecast that the government accounts would record a surplus from 2024-25.
The 2023 Budget in full:
- Hong Kong unveils HK$761 billion budget in bid to boost post-Covid recovery
- HK$5,000 consumption vouchers for all eligible residents
- Tax cuts scaled back, transport subsidy extended, other relief measures
- Jockey Club to pay HK$12 billion football betting tax over 5 years to increase gov’t income
- Cigarette packs rise by HK$12 in bid to disincentivise smoking
- Police equipment budget rises 59%, despite spending just 8.5% of 2022 allocation
- City expects to see HK$140 billion deficit, but ‘visible rebound’ in economy expected
- Gov’t to spend HK$50m on promotional work as city outlines new local ‘happy’ campaign
- Mixed reviews as critics slam gov’t for overlooking the poor
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