Hong Kong Financial Secretary Paul Chan announced the 2026/27 Budget on the 25th. He stated that benefiting from robust stock market performance and accelerated economic growth, which boosted stamp duty and profit tax revenues, the government’s consolidated account for 2025/26 has been revised from an earlier projected deficit of approximately HK$67 billion to a surplus of HK$2.9 billion.
The Budget also introduced multiple relief measures and tax concessions, including reductions in salaries tax, profits tax, and rates; increases in basic, married person, and child allowances; and an additional month of benefits for recipients of Comprehensive Social Security Assistance (CSSA), Old Age Allowance, and Working Family Allowance. Additionally, the government will increase the number of vouchers for community care and residential care services for the elderly, and raise the tax deduction ceiling for residential care expenses.
Regarding housing and land supply, the authorities plan to prepare land for approximately 98,000 private residential units over the next five years and temporarily suspend the release of commercial land. The regulatory framework for “Simple Housing” will be implemented in March. The development of the Northern Metropolis remains a key policy priority. The government intends to inject tens of billions of dollars into multiple relevant institutions to accelerate projects such as the Lok Ma Chau Loop, the San Tin Technology City, and the Hung Shui Kiu area.
Furthermore, the Budget proposes proactive alignment with the national 15th Five-Year Plan. The Chief Executive will also formulate Hong Kong’s first five-year development plan, aiming to play a more proactive role in areas such as AI-driven modern industrial development, advancing high-level technological progress, and attracting and gathering talent.
Commentary:
The most prominent feature of this Budget appears to be the “shift from deficit to surplus”. However, closer examination reveals that this so-called “HK$2.9 billion surplus” is fundamentally a fabricated fiscal illusion. This figure does not stem from actual revenue exceeding expenditure but is entirely fabricated through government accounting maneuvers: by raising the bond issuance ceiling from HK$700 billion to HK$900 billion, the government artificially created a short-term “surplus” on paper to appear financially sound. In reality, this money remains borrowed and does not represent genuine savings.
More absurdly, this practice not only misleads the public but also reflects the government’s disregard for fiscal transparency. The government uses clever number games to paint a rosy picture, attempting to convince citizens that Hong Kong’s finances are healthy and secure. Yet in reality, infrastructure spending, social services, and various expenditures remain substantial, with genuine fiscal pressures showing no sign of abating. This “paper surplus” is merely a temporary illusion, completely obscuring Hong Kong’s long-term structural fiscal issues. It may even foster misplaced trust in government policies among the public who remain unaware of the truth.