Question

In February 2020, the Financial Secretary of Hong Kong SAR Government, Mr. Paul Chan, reported

a fiscal deficit for 2019/20. To the worst, deficits are forecasted for the few years ahead.

Recently, some practitioners (e.g. PwC) have called for the government to take actions for revitalising

Hong Kong’s economy.

Required:

From a tax perspective, provide TWO recommendations or options that the Hong Kong

government may further explore to mitigate the contraction of the Hong Kong economy, with

justifications and arguments to support the validity of your recommendations and options.

Answer 1

Every economy is significantly impacted by two policies, monetary policy and fisal policy. monetary policy is prepared by the government of the respective country and the fiscal policy is implemented by the central bank. my recommendations will purely based on monetary policy as the majority of it deals with the tax policies like the finance bill. First recommendation is the government should give tax consessions for some time period to the foreign companies who have shown their interest to invest in hongkong. this will make the foreign companies to invest in Hongkong. the investment by foreign players will surely impact the countrys economy and production capacity and so the economy will expand.

The other tax measure should be decrease in the export duty. this move will increase the exports to other nations which increases the foreign reserves.