Donald Tsang

Sweeteners welcomed but lack of vision lamented

PUBLISHED : Thursday, 02 February, 2012, 12:00am
UPDATED : Thursday, 02 February, 2012, 12:00am


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The budget may have offered sweeteners to small and medium-sized enterprises but it lacks long-term vision, the business sector said.

Meanwhile, a government promise to add 5,000 international school places was seen as unsatisfactory.

While most business chambers and corporations welcomed increasing the loan limit under the SME Financing Guarantee Scheme and relaxing rules on export credit for SMEs, some criticised Chief Executive Donald Tsang Yam-kuen for not keeping his promise to lower the corporate tax rate from 16.5 per cent to 15 per cent.

'[Tsang] promised in his re-election pledge as the chief executive [to reduce the profits tax rate to 15 per cent over his current term of office],' said David O'Rear, chief economist of the General Chamber of Commerce. 'A one-off rebate doesn't help. Corporations need longer-term measures for projections.'

The American Chamber of Commerce said the addition of 5,000 international school places would not help expatriate parents on Hong Kong Island because all four new international schools would be built in Kowloon and the New Territories. 'The government once again fails to accept the international primary school access crisis ... the loss of jobs to Singapore, Bangkok and Shanghai is eroding Hong Kong,' the chamber said.

Kirsty Boazman, chief executive of the Australian Chamber of Commerce, was sceptical: 'A new campus site in the New Territories with placements going to the highest debenture bidders is not going to ease the situation.'

Financial Secretary John Tsang Chun-wah said abolishing capital duty - a tax charged on share issues when their price exceeded face value - on local companies would encourage fund-raising activities and attract investors to set up offices in Hong Kong.

But Patrick Yeung, former president for China at accountants' body CPA Australia, said the duty was meagre in such transactions. 'It's more a cosmetic move. We don't see any long-term plan towards economic and social sustainability,' Yeung said.

Tsang also announced a one-off rebate of 75 per cent of profits tax paid this year, subject to a cap of HK$12,000, and a halving charges for import and export declarations.

The biggest applause was reserved for changes in the SME Financing Guarantee Scheme, which will now cover 80 per cent of a firm's loans and at less cost, and the lifting of requirements for exporters to buy export credit insurance for clients.