HONG KONG (Bloomberg) - Hong Kong will likely need to raise taxes and introduce new levies as an aging population is increasing public expenditure, according to the city's top financial services official.
"Facing a fiscal gap brought by an aging population, raising taxes is inevitable," K.C. Chan, secretary for financial services and the treasury, said in his blog on Sunday (Jan 3). His remarks came after the government started a six-month public consultation last month to identify ways to enhance retirement protection in the city.
A structural deficit may appear over the coming 10 years if the growth of government expenses continues to outpace growth of gross domestic product and income, Chan said. Hong Kong is facing an ageing population and slower economic growth, while the government's financial situation remains sound in the short to medium term, he said.
The budget for social benefits and medical expenses would increase two to three times current levels in 30 years, assuming that the 65-and-older population will double and no new subsidies and benefits are to be added during the same period, Chan said.