Cut in stock trading stamp duty may be far from Donald's mind
Chief Executive Donald Tsang Yam-kuen is expected to announce lower salary and corporate taxes in his policy address tomorrow. But the cut that the financial industry looks most for - a reduction in the 0.1 per cent stamp duty on stock transactions - may be a long time coming.
Stamp duty may be too much of a goose that lays the golden egg for Mr Tsang to tinker with. The government is estimated to have collected about HK$150 million of duty each day last month as the stock market for the first time recorded average turnover surpassing HK$100 billion.
The government levies stamp duty of 0.1 per cent on both the buying and selling of shares, while it exempts warrant and option trading. The sizzling market means stamp duty may total HK$30 billion this year - double the record HK$15 billion collected last year.
While Hong Kong and the mainland still collect stamp duty on stock trading, many overseas markets have abolished it. Tax experts say some markets make up for not having the levy by imposing capital gains or dividend taxes.
'I do not think the government will cut stamp duty at the moment as the stock market is so strong and it has no need to boost turnover,' said PricewaterhouseCoopers senior tax partner Tim Lui Tim-leung.
Chim Pui-chung, legislator for the financial sector, agreed. 'It is so easy to collect and it is a huge amount of money,' he said.
A push for financial people
Mr Tsang's policy address may also include plans to extend Hong Kong's free education system to 12 years from nine. This is good news for young people, but White Collar suggests Mr Tsang also look at improving the training of our financial professionals, an area where we may be lagging other world-class cities.
He may well take a look at how London does it. London is not only promoting itself as a financial hub for international companies to list but boasts of being a 'city of learning' that offers all kinds of post-graduate and professional training.
There are about 83,000 overseas students in London, many of them focused on accountancy, actuarial, insurance and banking subjects.
Hong Kong may well be one of the top 10 markets worldwide in terms of fund-raising size and market capitalisation but it has taken few overseas students wanting to study finance. In fact, many of our investment bankers trained abroad.
Money planners lift standards
More on training and education. Tony Mak, president of the Institute of Financial Planners of Hong Kong and our podcast guest this week, outlines the steps his industry is taking to lift professional standards.
He said the institute planned to have the first cross-border CFP Certification Examination for candidates from the mainland and Taiwan, after which cross-border professionals will be able to practise in Hong Kong.
Mr Mak graduated from the Chinese University of Hong Kong and joined the life insurance industry in 1977. He is now senior district director at American International Assurance Company (Bermuda).