Tax cut the wrong move during a serious economic crisis

PUBLISHED : Wednesday, 26 November, 2008, 12:00am
UPDATED : Wednesday, 26 November, 2008, 12:00am

On the one hand, some of our legislators demand that the government increases handouts and follows the example of the Taiwanese government in giving shopping coupons to all and sundry. On the other hand they ask for reductions in the levels of income tax in Hong Kong.

At a time when many sources of government revenue are being substantially reduced, in particular those related to the financial markets, there is no valid reason to reduce our already light tax level in comparison to other jurisdictions' tax burden.

There are many employees whose fixed incomes will not be affected by the current crisis and who will in fact be better off because of it. Already property prices and rents are falling, retail and restaurant discounts are increasing and deflation will leave people with more cash in their pockets.

Why they should also benefit from lower income tax is a mystery. Companies making profits should also contribute to the public coffers, after all no profits no tax bill. In fact tax increases on the haves to generate more income for distribution to the have-nots would appear to be a more prudent course of action.

With regard to the shopping voucher scheme our government has, hopefully, learned a lesson from the lack of enthusiasm generated by the electricity rebate. Many saw this as an unnecessary perk for the wealthy and an incentive to increase energy consumption. While giving some form of coupon to those in need is perfectly acceptable, handouts to other citizens are not. In fact it would be a positively irresponsible move when we are facing a large budget deficit. Supermarket coupons are often distributed through incentive programmes and one merely uses them in lieu of cash at the checkout rather than on extra purchases.

That they will generate increased consumption among the haves is therefore debatable.

If our legislators cannot come up with rational and reasonable proposals to improve our economy, rather than their current crowd-pleasers, the public and the administration should politely but firmly advise them to shut up.

Martin Brinkley, Ma Wan