Financial Secretary Paul Chan wants to form a tax policy unit to review Hong Kong's tax regime.
Holding his post-Budget press conference today, Mr Chan said the Government will explore ways to broaden the tax base to boost revenue.
To ensure Hong Kong's competitiveness and to address the problem of a narrow tax base, he proposed forming the tax unit under the Financial Services & the Treasury Bureau.
"Over the past few years, we have maintained a healthy fiscal surplus and a full employment rate. However, due to our narrow tax base, we still need to study how to increase Government revenue in the long run."
Given that governments worldwide are using tax concessions as a means to attract investment, he said the Government will explore whether similar measures should be adopted in Hong Kong.
On the Government's revenue estimates, Mr Chan said the projected revenue for 2017-18 is much higher than that for 2016-17.
"The revised estimates on Government revenue are much higher than the original estimates. This is mainly due to the higher-than-expected land sale income and stamp duty revenue. As land sale income is highly volatile, it is difficult to have accurate estimates."
However, the Government must still exercise financial prudence and avoid big increases in recurrent expenditure.
"Public resources should be spent on what the society needs. Any measures implemented by the Government must be affordable and sustainable in the long term. Therefore, it is not preferable to fix government spending at a certain percentage of the Gross Domestic Product."
Mr Chan said though his term as Financial Secretary is short, he is determined to perform his duties well and make use of the fiscal surplus to improve social services and boost development.
In the Budget, $30 billion from the surplus was earmarked to enhance services for the elderly and disabled, with $20 billion for sports development, and $10 billion for I&T development.
