The Hong Kong government has proposed bringing back a three per cent tax on hotel accommodation almost 16 years after it was scrapped. If implemented, the levy could earn the government HK$1.1 billion annually.
Hong Kong plans to resume charging the Hotel Accommodation Tax at a rate of three per cent starting from January 1, 2025, Financial Secretary Paul Chan said on Wednesday as he delivered the budget for the next financial year.
The tax would account for less than one per cent of the spending of overnight visitors in Hong Kong, the minister said, while generating income of around HK$1.1 billion for the government annually.
Under the Hotel Accommodation Tax Ordinance enacted on July 1, 1966, hotel guests in Hong Kong were charged a two per cent levy on stays. The tax was later raised to three per cent, but it was waived from July 1, 2008.
According to a report by the Audit Commission in 2007, the government earned HK$310 million in the 2005-06 financial year from the hotel tax.
Government sources told HKFP on Wednesday that the tax had a “minimal impact” on tourist figures previously and that bringing it back would not deter visitors.
According to the Hotel Accommodation Tax Ordinance, the levy was exempted if the rate of the accommodation charge was less than HK$15 per day. Exemptions also applied if the accommodation was provided by a society, such as a club, a company, a school or an institute, or if the hotel had less than 10 rooms available for lodging guests.
Hong Kong is expected to log a shortfall of HK$101.6 billion in the current fiscal year ending in March, almost double the forecast given by the government last year. The government’s revised revenue for 2023-24 stood at HK$554.6 billion, which was HK$87.8 billion – or 13.7 per cent – lower than the original estimates.
Chan on Wednesday also announced that the government would set over HK$1.1 billion aside to promote mega events and boost tourism in Hong Kong, in a move to “soft-sell” the city.
After lifting all Covid-related curbs and measures early last year, Hong Kong has seen arrivals return to the city, led by those from mainland China. However, visitor numbers remain below pre-pandemic figures, with January’s provisional 3.83 million arrivals just 56.4 per cent of the 6.78 arrivals recorded in January 2019.
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