Determinants of land-based fiscal dependence in Hong Kong

This paper examines the determinants of land-based fiscal dependence in Hong Kong using annual data from 1970 to 2020. The evidence points to structural change as a key factor. As manufacturing declined, its contribution to public revenue weakened, and land-related income became more important. The property sector emerges as a key driver. A larger share of real estate is associated with greater dependence on land revenue. By contrast, tax capacity contributes little to explaining long-run variation, although short-term movements in tax revenue are still related to fluctuations in land-based income. This pattern differs from mainland China, where land finance remains tied to industrial expansion and urban growth.