The Hong Kong Special Administrative Region government plans to step up efforts to operate in a more cost-effective manner amid a HK$87.2 billion deficit, with the civil service, university funds and transport concessions bearing the brunt of the move.
Delivering the 2025-26 Budget on Wednesday, Financial Secretary Paul Chan Mo-po said that despite the expenditure cut, the government will strive to maintain the efficiency of public services through integrating internal resources, streamlining procedures, and effectively utilizing technology.
According to the budget, the reduction rate of recurrent government expenditure will be increased from the original 1 percent to 2 percent this year. The arrangement will be extended in the following two years, resulting in a cumulative total cut of 7 percent from 2024 to 2027. This will achieve estimated savings of HK$62.40 billion ($8.03 billion) during that period.
To enhance labor utilization, an estimated 10,000 civil servants’ posts will be cut by April 1, 2027, and the pay of top executive officials, the legislature, the judiciary and District Council members will be frozen for 2025-26.
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On the education front, a 2 percent reduction each year is reflected in the offering of HK$68.1 billion in funding to the University Grants Committee (UGC)-funded universities for the coming three years.
Starting September, the HK$2,500 subsidy for primary, secondary and kindergarten students will end.
The HK$2 public transport fare concession scheme benefiting the elderly and disabled commuters, will undergo readjustments. This includes the introduction of a tiered subsidy mechanism, with trips costing more than HK$10 to enjoy an 80 percent discount instead of a flat HK$2, along with the number of concessionary trips to be restricted to 240 per month.
A HK$100 leveling-up in monthly public transport expenses – from HK$400 – has been proposed as the new threshold for the excess expenses receiving a one-third subsidy under the Public Transport Fare Subsidy Scheme, with the subsidy cap remaining at HK$400.
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Other measures on the horizon to lift government income include the possible reintroduction of tolls for some major tunnels and trunk routes and hikes in annual license fees for electric private cars, parking meter charges, as well as penalties for traffic offenses – moves that it is hoped will generate HK$2 billion in annual revenue.
One hundred percent reductions will be offered in the 2024-25 assessment year’s salaries tax and tax under personal assessment, as well as in the 2025-26 year’s profits tax, both capped at HK$ 1,500, half of which have been axed since last year’s HK$3,000 ceilings.
The rate concessions for domestic and non-domestic properties announced survive the large-scale cuts for the first quarter of 2025-26 but are subject to an upper limit of HK$500 – also half that of the last budget’s HK$1,000.
