Photographer: Paul Yeung / Bloomberg
Photographer: Paul Yeung / Bloomberg
Hong Kong unveiled its first increase in stamp duty in securities transactions since 1993, causing a wide market sale of $ 7.6 trillion and sending shares of the city stock market to its biggest decline in more than five years.
The projected increase in business taxes to 0.13% from 0.10% was part of a series of new measures announced in the Hong Kong budget that included increased spending to help residents overcome the pandemic. Although the city’s economy has fallen in the last year, stock prices and billing they have grown in the midst of a world market boom.
Hong Kong benchmark Hang Seng index sank 2.6% at 13:41 local time, led by a 7.8% decline in Hong Kong Exchanges & Clearing Ltd. The stock market operator was heading for its biggest drop since 2015, even after reporting record annual earnings on Wednesday.
“The impact will be significant,” Kingston Lin, general manager of Canfield Securities ’asset management department in Hong Kong, said before the city’s announcement. “The market is doing very well and, of course, will bring more revenue to the government. But higher transaction costs will be a concern for the exchange. ”
The government announced spending measures of more than A $ 120 billion ($ 15.5 billion) to alleviate economic hardship for city residents.
Increasing the stamp duty will help pay for the increased expense. In fiscal year 2019/20, the debt contributed 33.2 billion Australian dollars in revenue.
The Hong Kong stock exchange said on Wednesday that profits rose 23% to a record A $ 11.5 billion in 2020, helped by a 60% jump in stock trading.
“While We are disappointed with the Government’s decision to increase the stamp duty for share transactions, we recognize that this imposition is a major source of government revenue, ”an exchange spokesman said.“ HKEX hopes to continue working closely with all its stakeholders to drive continued success, resilience, dynamism and ‘attractiveness of Hong Kong capital markets’.
| Financial year | Securities Trading Stamp Tax |
|---|---|
| 1993-98 | 0.15% |
| 1998-2000 | 0.125% |
| 2000-2001 | 0.125% |
| 2001- ara | 0.1% |
Frankie Yan, a spokesman for financial services at the Professional Commons and holder of the SFC license, said the increase could lead to additional revenue of A $ 10 billion in government. But the cost of a one million Australian dollar trade would only be about 300 Australian dollars, he said.
“Given the intangible amount, it would not discourage investors’ intention to trade shares, ”he said.
– With the assistance of Jun Luo
(Updates with market changes from the first paragraph.)