Not much meat in Macleod giveaways

PUBLISHED : Sunday, 07 March, 1993, 12:00am
UPDATED : Sunday, 07 March, 1993, 12:00am

ANYONE who drives a car, enjoys a drink and has yet to be caught by the health warnings on those packets of 20 never walks away from a Budget smiling.

Last Wednesday was no exception. The Financial Secretary, Mr Hamish Macleod, slapped a 9.5 per cent duty increase on alcohol, fuel and tobacco in his give-away Budget.

For the so-called sandwich class, those in the $10,000 to $40,000 a month pay bracket, the big pluses were an increase in personal allowances in excess of 21 per cent, and the promise of a better deal for first-time home-buyers.

The sandwich class form the bulk of Hongkong's taxpayers and have traditionally been the hardest hit come Budget time.

Over the last 10 years the standard rate of tax has dropped from 17 per cent to the current rate of 15 per cent. Allowances, on the other hand, have risen, for a single person from $28,000 (1985/86) to $56,000 as proposed by Mr Macleod this year. This was a rise of about 21.74 per cent over the previous year, and was hailed as a major windfall to those in the sandwich class.

The old cliches were wheeled out, such as ''putting more money back in your pocket'' and ''increased spending power''.

But such sentiments could be no further from the truth. The man in the street - the sandwich class - will benefit little from this Budget.

Everything that has been thrown up in allowances is seen by some as a smoke-screen to try and soften the blow caused by inflation.

If the sandwich class think they are better off, they should think again. Inflation has already diluted a good portion of the tax allowances.

And if you drink, smoke and drive a car your costs have already gone up.

For most expatriates, the Budget will mean very little in real terms as they tend to be cushioned from the realities of Hongkong life through inflation-proof salaries packages, housing allowances and other perks.

Anyone who has to bring up a family knows more than most just how expensive Hongkong has become. It is no longer a cheap place to live and, especially those caught in the sandwich class, difficult to make ends meet.

Ten years ago real wage increases were averaging between five and six per cent. Today they can be read in negative terms, with inflation hammering away at any gains made on the wages front.

The allowances given away by Mr Macleod will be devoured by inflation, and the benefit to the sandwich class will be minimal.

An increase in the fuel duty, for example, will have knock-on effect across the board. Fares on taxis, buses, mini-buses and ferries will have to be raised to help offset the increased cost of fuel.

And if anyone thought that increased fuel costs will keep cars off the road, think again. The Government has done nothing with regard to first-registration tax.

On the subject of housing for the sandwich class, Mr Macleod left more questions than he answered.

The point is, the sandwich class is caught in a cleft stick. It either falls out of the range to qualify for government housing or cannot quite afford to buy homes in the private sector.

The Governor, Mr Chris Patten, last year pledged to help 13,000 sandwich class families to find housing. Mr Macleod put aside $2 billion to benefit up to 3,000 families over the next two to three years.

What he hasn't done is spell out exactly how this will work. Will he, for example, favour those at the lower end of the sandwich class scale? Ms Yvonne Law Shing Mo-han, a partner with Deloitte Touche Tohmatsu, said: ''The budget should not be seen as a give-away. The ordinary man in the street, I think, has gained very little.

''What the budget has done, however, is improve the middle-and lower-income earners' quality of life.

''The expansion of the kindergarten remission scheme, help for haemophiliacs infected with HIV through contaminated blood, more money to the Open Learning Institute, grants to sport and the performing arts, more money spent on health care and improvements to the transport infrastructure in the Northwest New Territories all point to a government that cares about the quality of life of ordinary men and women,'' she added.