HONG KONG (Reuters) – Hong Kong’s financial chief ruled out the introduction of a capital gains tax for the foreseeable future, South China Morning Post reported on Wednesday, amid concerns such a tax would add to pressures on the weak property market.
Financial Secretary Paul Chan, who was attending the World Economic Forum in Davos, told the newspaper in a phone interview that the tax is not suitable for Hong Kong.
He told Sing Tao Daily in a separate interview on Wednesday that the government has to consider Hong Kong’s economic situation, and the impact of the tax on the asset market and attracting foreign business and capital.
Chan reportedly said earlier this month the government was evaluating potential new tax revenue streams including the capital gains tax.
Investment bank JP Morgan said in a report on Tuesday if a capital gains tax was to be introduced, it could induce panic- selling before the implementation, causing short-term pressure in home prices.
Hong Kong house prices are forecast to continue their downward spiral this year, with UBS and Citi predicting a drop of 10%, following a 20% decline since a 2021 peak, hit by a slow economic recovery and rising interest rates.
(Reporting by Clare Jim; Editing by Jane Merriman)