CONTROVERSIAL TAX CAN HELP THE ECONOMY IF REVENUE IS NOT SQUANDERED

PUBLISHED : Friday, 07 March, 2003, 12:00am
UPDATED : Friday, 07 March, 2003, 12:00am

I agree with Sean Niem's opposition to ethnic/national divisive rhetoric, ('Criticism of expatriates unfair', South China Morning Post, February 28) in his reply to my letter of February 25. However, I think he was barking up the wrong tree.


Mr Niem's criticisms of my letter are all based on unjustified generalisations of my qualified comments by omitting all the qualifiers such as 'some' and 'most'. My comment that some expatriates' careless remarks could mislead 'the weak-willed among our domestic helpers' became, in Mr Niem's rendition, my stereotyping helpers as weak-willed.


I agree with Mr Niem that everyone is entitled to 'whine so passionately', although I find whining an ineffectual act. Although I feel Mr Niem has failed to follow his own counsel and make relevant arguments, I wish to continue to play my part in the debate on the controversial tax and pay cut for foreign domestic helpers.


In a liberal democracy, the role of the government in the employer-employee relationship should be limited to the provision and enforcement of rules in accordance with the common precept of fairness for the prevention and settlement of disputes. A minimum wage is a specific provision for the protection of the economic rights of both the employee and the employer. In Hong Kong, foreign domestic helpers are the only labour group which gets minimum wage protection. It is fixed at a point that is higher than it would be in a free market, but is not so high as to arouse employers' indignation. We may consider the government's intervention in the employer-employee relationship a passive and disinterested one, as long as what the employer pays is what the employee gets.


Corporate downsizing and the problems in the property market are some of the real consequences of the recent economic downturn and employers have generally suffered more than foreign helpers. Therefore, there is justification for a pay cut. However, with the employment tax, the government's intervention has become active and interested. A mismatch between payout and receipt in a domestic employment contract can cause distorted expectations on the part of the employer or employee.


Furthermore, a responsible government cannot avoid the question of what rights employers get as a consequence of the newly-imposed tax liability.


As an employer, I would demand a say on how the government applies its employment tax income. There is little hope that any sustainable social benefit may result from the proposed allocation of this income for retraining. For example, in Germany (according to a Newsweek article) retraining is ridiculed. The unemployed get shuffled around without any hope of ever getting any jobs for which they have supposedly been trained. Hong Kong's own experience in retraining has been a fiasco.


The employment tax should be levied as a bond for the employer's good behaviour, to be returned to the employer at the end of each contract. With the refund, free consumer spending by employers should work more efficiently through the market than government allocation through ineffective retraining, and will help the economy. With the refund, no doubt some employers like myself will reward good helpers with a discretionary bonus.


My proposal is premised on the opinion that employers are entitled to benefit from a pay cut. Anyone who is not misled by the rhetorical slogan of 'lowest paid and hardest working' would see that a pay cut is unlikely to cause any difficulties for our foreign helpers when it comes to paying for their children's food or education back home.


The cut may, however, make it more difficult for some of them to acquire another plot of land, or to keep an extra domestic helper back home.


For pay level comparison, consider the minimum hourly pay of $15 at McDonald's. A cleaner working six 12-hour days may get $4,680 a month.


Now, how would our correspondents compare the pay and the working environments of such a cleaner and a foreign domestic helper in Hong Kong?


PIERCE LAM


Central


 

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