Public Finance of Hong Kong

Question 1

Public finance

Answer 1

Government’s revenues and spending

Question 2

Major items of government spending in HK (6

Answer 2

Infrastructure 
Education
Social Welfare
Health care
Environment and food
Economic

Question 3

What do government spend money on in terms of economics? (3

Answer 3

Monitors the financial system, preserves jobs, develops pillar and emerging industries

Question 4

Major sources of government revenue in HK (4

Answer 4

Land premium (Money from land sales of land plots)
Profits tax (Levied on profits from business in HK)
Stamp duties (Levied on sale, transfer and leases of immovable properties and stock transfer)
Salaries tax (Levied on salaries or pension from employment in HK)

Question 5

Principles HKSAR follows (4

Answer 5

Keeping expenditure within the limits of revenues in drawing up its budget
Strive to achieve a fiscal balance
Avoid deficits
Keep the budget commensurate with the growth rate of its gross domestic product

Question 6

Budget

Answer 6

Financial statement of the estimated revenue and spending of the government in a fiscal year

Question 7

Fiscal year

Answer 7

One year period companies and government use for financial reporting and budgeting

Question 8

When does a fiscal year starts?

Answer 8

1 April

Question 9

Types of budget (3

Answer 9

Balanced budget (=)
Deficit budget (-)
Surplus budget (+)

Question 10

Right of HK residents in public finance

Answer 10

Enjoy the services provided by the government free of charge or at a price below cost

Question 11

Responsibility of HK residents in public finance

Answer 11

Pay taxes

Question 12

Use of paying taxes

Answer 12

The government has enough money to provide different services of residents

Question 13

Goals of public finance (3

Answer 13

Meeting people’s needs (Services)
Stimulating economic growth (Education, infrastructure improve competitiveness. Productivity raised -> foreign investors attracted in HK)
Reducing income inequality (Redistribute from rich to poor ((Welfare))))

Question 14

Governing principle of HKSAR government of public finance (2

Answer 14

Positive Non-interventionist approach
“Small government, Big market” approach
(Generally not intervene the free market, when it does, it only makes the economy more efficient, effective and fair)

Question 15

What does HKSAR government act as in welfare provision? What does it exercise?

Answer 15

Regulator (Rather than a provider of welfare programme)

Fiscal prudence

Question 16

Characteristics of taxation system in HK (3

Answer 16

Simple tax structure
Low tax rate
Narrow tax

Question 17

Rationale behind governing principle of HKSAR Government

Answer 17

Welfare states/ Welfare provider -> Concern for financial burden and financial sustainability
Changing low tax policy undermine competitiveness of HK