Proposal to raise taxes on betting in Hong Kong to be considered, minister says

A controversial proposal to raise Hong Kong’s betting duty to generate more government revenue will be given “prudent consideration”, the financial services minister has told legislators.

Asked about the suggestion during Wednesday’s Legislative Council meeting, Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said the government would look into different measures to ensure fiscal sustainability.

This would include a “tax rate adjustment”, Hui said. He was quick to add that the government would strive to maintain the policy of a low tax rate “as far as possible” and that any increase would not affect people’s livelihood.

“We will take into account the fiscal position of the government, the economic environment of Hong Kong, and the impact on people from different walks of life in the community and give prudent consideration to the proposal of adjusting the betting duty,” he said, responding to a question by New People’s Party lawmaker Adrian Ho King-hong.

The idea of increasing the betting duty was outlined in proposals the party put forward last month to Financial Secretary Paul Chan Mo-po for the 2023-24 budget.

Chan has hinted Hong Kong could face a deficit of more than HK$100 billion (US$12.7 billion) for the current financial year because of the Covid-related slump in economic activity.

As a means to raise revenue, the party proposed increasing football betting duty from 50 per cent to 80 per cent.

The idea quickly caught media attention as the party is headed by Regina Ip Lau Suk-yee, a lawmaker and convenor of the Executive Council – Hong Kong’s de facto cabinet.

But the proposal drew immediate criticism from the Hong Kong Jockey Club, which accused the party of failing to understand the betting business and that, if approved, it could “create irreversible damage to Hong Kong” and give rise to illegal or offshore gambling.

In a statement last month, it also argued that while the party’s proposed duty increase would theoretically raise HK$25 billion to HK$31 billion in taxation from the club, the increased levy would drastically reduce its operating revenue from HK$15 billion to HK$9 billion.

The organisation warned the hit to revenue would result in either zero surplus or a deficit, and prevent the club from making investments and charitable donations.

In the Legco meeting, social welfare sector lawmaker Tik Chi-yuen also expressed concerns that an increase in betting duty might reduce the club’s ability to fund charitable causes.

Hui reiterated that it would weigh all factors and evaluate the effects on areas such as people’s livelihoods if the government were to adjust the betting duty.

A spokesman for the Jockey Club declined to comment on Hui’s remarks. “We do not have anything to add to what we have said in the [press statement] issued [last month],” he said.

In Hong Kong, it is government policy not to encourage gambling.

But the city allows limited and regulated means of gambling and has authorised the Jockey Club as the only licensed betting operator in Hong Kong. The club conducts horse race betting, football betting and lotteries. The government charges the club a betting duty.

At present, duties on betting on horse races and football matches are charged on net stake receipts. The duty rates for betting on horse races are from 72.5 per cent to 75 per cent on a progressive basis and 50 per cent for football matches.

Betting duty for lotteries are charged at 25 per cent on the amount of proceeds.