In the Media

Donald Trump is set to return as President of the United States, ushering in the era of Trump 2.0. His new agenda focuses on tax cuts, reducing trade deficits, and limiting immigration. Trump aims to maintain low tax rates and has proposed a revamped tax structure in his "2025 Plan," which could worsen income inequality. Dr. Luk noted that while Trump's tax policies may stimulate the economy, they could also increase national debt and impact social welfare spending, thereby challenging government operations.

The Hong Kong government is expecting a deficit of nearly HK$100 billion for the current year, significantly higher than the initial estimate of HK$48.1 billion made last February. The IMF has highlighted the necessity for Hong Kong to enhance its tax revenue to address increasing spending pressures linked to an ageing population. Prof. Heiwai Tang, Associate Dean of HKU Business School and Director of the Asia Global Institute, supports raising revenue either by raising tax rates or by broadening the tax base to address the issue of possible structural fiscal deficits. He highlighted a “mental trap” among government officials who believe that higher taxes would harm productivity, and he pointed out that Singapore’s implementation of a goods and services tax (GST) did not hinder productivity in the medium run. He stated, “Broadening the tax base, especially introducing the sales tax, will be a one-way street,” emphasising the need for sustainable revenue sources as government expenses grow.