A local think tank on Thursday said the government should consider increasing taxes on the wealthy in this month's budget.

The Our Hong Kong Foundation is forecasting a consolidated deficit of around HK$5 billion to HK$10 billion this fiscal year, down from last year’s deficit of HK$80.3 billion.

But it said the city’s public finances continue to face challenges due to an ageing population as well as major infrastructure projects that are underway.

As such, the foundation put forward 18 suggestions, which it believes could bring an additional HK$64 billion in revenue.

One of these is to introduce a three-tier standard tax rate for personal income, raising it to 17 percent, from the current 16 percent, for those whose annual income exceeds HK$7.5 million.

“We have tried to look into Hong Kong’s tax rate compared to other jurisdictions, for example Singapore, people are paying a progressive tax rate, with the highest tax bracket at 24 percent,” said Pascal Siu, senior research manager at the foundation.

“Even with our minor adjustment of up to 17 percent, that would not hugely affect our competitiveness... the impact on Hong Kong’s competitiveness is very small,” he added.

The foundation also suggested increasing the duty rate for the Mark Six lottery from 25 to 30 percent and lowering the prize fund ratio from 54 to 49 percent, generating an extra HK$500 million.

On the other hand, to cut expenses, the think tank said the HK$2 subsidised transport fares, for those aged 60 or above, should be further reduced to 120 trips per month from the current 240 trips, saying that those eligible for the scheme take less than an average of 1.5 trips per day.

“We believe there is still a bit of room to adjust [the scheme] and we also hope that by adjusting it, it could match the actual usage better... currently, up to 88 percent of users recorded a use of less than 120 trips per month,” said researcher Katie Ho.

“Rather than giving out benefits to everyone, we hope to switch our approach to a more targeted approach, supporting people who are in need and supporting people who are underprivileged,” she added.

As for the Public Transport Fare Subsidy Scheme, it said the subsidy threshold should be raised from HK$500 to HK$600, and the monthly subsidy cap should be lowered from HK$400 to HK$300, to offer more targeted resource allocation to citizens.

In terms of public health resources, it urged the government to enhance medical price transparency within the private healthcare sector, so as to guide those who are more financially capable to transfer from public healthcare to private.

Civil servant pay should be adjusted according to work performance, the foundation said, with the goal of leveraging AI to boost departmental efficiencies.