Hong Kong finance chief rules out capital gains tax for ‘foreseeable future’

Hong Kong’s finance chief has ruled out the introduction of a controversial capital gains tax in the foreseeable future, pointing to the city’s economic conditions, as he also rejected suggestions on a departure tax.

“During the consultation period, there were many people who had different opinions. As a responsible government, we must do our due diligence,” he said on Wednesday.

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Chan said the government had not considered putting forward such a tax “now, or in the foreseeable future”, as it was not suitable for the city.

He also rejected calls from the Liberal Party to introduce a land and sea departure tax in a bid to ease the city’s deficit amid a trend of Hongkongers spending in mainland China.

The idea drew scorn from economists and politicians who warned the “politically insensitive” idea could backfire.

Investment bank JP Morgan has earlier warned that the introduction of a capital gains tax could trigger a panic sale in the local property market, after Chan said the option was one of the proposals being considered by the government to ease its ballooning deficit of more than HK$100 billion (US$12.8 billion).

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According to a report by the investment bank, individual capital gains from selling assets such as property and stocks could also lead to short-term pressure on home prices, though the impact might only be temporary.

There is no capital gains tax in Singapore, the city’s main rival.

Earlier this month, Chan said the government would review some charges for public services and those based on a user-pays principle in a bid to raise revenue for the public coffers following massive spending tied to the pandemic.

Chan is in the process of gauging public views ahead of his budget speech set to be delivered on February 28.

Additional reporting by Jeffie Lam