Experts sound welfare alert over ageing population, wealth gap

PUBLISHED : Friday, 23 February, 2007, 12:00am
UPDATED : Friday, 23 February, 2007, 12:00am

The government will face growing pressure to pay for more social and medical services due to an ageing population and a widening wealth gap, experts have warned.

Whether taxpayers would ultimately have to fork out more depended on whether economic growth could help the government collect more revenue to pay for the services, the Taxation Institute of Hong Kong said. Figures released by the government showed the median age of the population rose from 34 in 1996 to 39 last year.

Chua Hoi-wai, of the Hong Kong Council of Social Service, warned that supporting services would become increasingly insufficient as the population continued to age.

'Inevitably, it will put pressure on public spending in the longer term,' said Mr Chua, also a member of the government-appointed Support Group of Population Policy.

He was most concerned about the wealth gap after figures showed that individuals with a monthly income of HK$4,000 or less grew from 300,000 in 1996 to 390,000 last year. People with a monthly salary of HK$40,000 or more surged from 140,000 to 210,000.

Mr Chua said public spending on the needy should be seen as a social investment rather than a burden to taxpayers.

He said the support group, which is compiling a draft report on the ageing population and labour retraining to the Council for Sustainable Development, should take into account the latest figures before finalising recommendations.

Taxation Institute president Richard Chow Yeung-tuen agreed that an ageing population would put pressure on public finances.

He said taxpayers might not necessarily have to dig deeper into their pocketed as long as economic growth was strong enough to generate more revenue for public coffers.

'But that means room for tax cuts will definitely become more and more limited as spending grows,' he said, adding individual taxpayers should be given bigger concessions as they had to spend more to take care of ageing parents.

The government should also provide more financial incentives such as higher child allowances to increase the birth rate, he added.