Inflation fears kill tax rebate idea
Inflation fears have persuaded Financial Secretary John Tsang Chun-wah not to give any new tax rebates as he fears more cash in the street will unavoidably add to inflationary pressure.
A top government official who declined to be named said while some people were unhappy with the decision, there was zero chance that the government would change its mind.
'No rebate will be given as long as the inflationary pressure persists,' the official said.
The top official said popularity was the least important factor for the financial chief to consider when it came to the budget.
Speaking at a televised forum on the budget last night, Tsang said he had deliberated for a long time on whether to grant new tax rebates this year, but had abandoned the idea because of inflation fears. Last year, he announced a tax rebate of up to HK$6,000.
Later at a post-budget press conference, Tsang said another reason for not offering tax rebates this year was because 60 per cent of the city's 3.5 million employees were not taxed this year anyway.
'The number of taxpayers who will get a tax rebate is not big. We have other ways to return wealth to the people, such as an injection of money into the MPF accounts and those who are on occupational retirement schemes.'
Tsang said more than three million account holders would benefit from the cash injection and the move would not push up inflation.
'I have placed much emphasis on helping our citizens in need to cope with inflationary pressures while avoiding any excessive stimulating effect on overall consumption,' he said.
Lawmaker Jeffrey Lam Kin-fung, from the government-friendly Economic Synergy, said the middle-class would feel they had been unfairly treated by the decision.
Tam Yiu-chung, chairman of the Democratic Alliance for the Betterment and Progress of Hong Kong, said relief measures without tax rebates would not address the immediate needs of the middle class.
But Ayesha Macpherson, chairwoman of the Hong Kong Institute of Certified Public Accountants' taxation committee, supported the financial secretary's decision not to grant another rebate.
'We agree a new tax rebate would stimulate consumption as taxpayers would have extra disposable income,' she said.