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  • Jul 23, 2014
  • Updated: 10:34am
Mr. Shangkong
PUBLISHED : Monday, 05 November, 2012, 12:00am
UPDATED : Monday, 05 November, 2012, 8:03am

New property tax a blow to the Hong Kong dream

Government move to impose extra housing stamp duty on non-permanent residents penalises many taxpayers hoping to find a place to call home

BIO

George Chen is the financial editor and columnist at the South China Morning Post. George has covered China's financial industry and economic reforms since 2002. George is the author of Foreign Banks in China. He muses about the interplay between Shanghai and Hong Kong in Mr. Shangkong columns every Monday in print and online. Follow George on Twitter: @george_chen
 

We all know about the American dream. But let me tell you about a Hong Kong dream.

I have a friend. Let's just call him J.

Two years ago, J, who was born in Guangzhou, made a decision that surprised most friends, and some of his family. He gave up a diplomatic job in Beijing and applied to the University of Hong Kong to do a graduate degree in international relations, which he completed about a year ago.

J and I went to the same HKU programme and we became good friends. In the final few months of the programme J, like many other full-time students, struggled to get an internship that might lead to a job offer. There aren't many diplomatic job opportunities in Hong Kong, so J ended up with a public relations firm, where he is now a full-time employee.

When J worked in Beijing, he was the chief interpreter for a well-known diplomat from an Asian country. Now, as an associate with the public relations firm in Hong Kong, having a master's degree didn't get him much of a raise from what he was earning in Beijing.

I once asked J if he thought he made the wrong decision to move to Hong Kong. He said "no", because the reason he came was more about his own "Hong Kong dream", and not just about making money. He never spelled out his dream exactly, but it's not hard to imagine what was going through his mind.

Hong Kong is a place where you can get connected to the entire world and not be constrained by the "Great Firewall", which is aimed at keeping people on the mainland from visiting websites such as Facebook.

Hong Kong is also a city where you can freely debate with your professors the causes of the Cultural Revolution and the legacy of Taiwan. And even if you disagree with your teacher on such politically sensitive topics, you don't need to worry about getting a bad grade.

These two things that many local Hong Kong people might take for granted mean a lot to people like J, who left good jobs and probably bigger flats on the mainland to chase their Hong Kong dreams. It's much like immigrants who struggle to get to the United States to realise their dreams in cities such as New York or Los Angeles.

When you embrace a city, you gradually start to call it home, and then you naturally consider making your home there.

J recently married and wants to buy a small flat that costs less than HK$5 million. He has some savings for the down payment and has his eye on a property in Sha Tin. The original plan was to make the purchase of the flat a sort of gift for him and his wife, so she could relocate from Guangzhou where she works.

But on October 26, his dream started to look more like a nightmare when the government unexpectedly announced an extra 15 per cent stamp duty for homebuyers who were not Hong Kong permanent residents.

"Do you think the policy is a fair one for a non-permanent resident like me? I am really disappointed. After all, I am also a Hong Kong taxpayer," J said.

Well, is it fair? And what does it say about the kind of international city Hong Kong says it wants to be?

 

George Chen is the Post's financial services editor. Mr. Shangkong appears every Monday in the print version of the SCMP. Like it? Visit facebook.com/mrshangkong

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This article is now closed to comments

shouken
I am a mainlander teaching at a major university there. I encourage my students to debate about HK independance and never assigned a grade on the basis of their political views according or disaccording with mine or with the CCP. Neither to my knowledge do my colleagues grade students on their political views.
The GreatWall is a nuisance but we can get over it pretty easily. And, yes, I have not been able to access my Facebook account, but so what? I am connected with my friends in the US via QQ.
In fact, I am typing this comment on SCMP.com right now in my school office even without using any "overcome-Wall" software. Yes, it takes longer for all the SCMP pages to load, but I have experienced only occasional problems. Frankly, I do not believe what you say about your friend's moving to HK for freer access to info and for so-called freedom. You vastly exaggerated the importance of these attractions.
donniemcm
Well to balance this post I would say I an a F(rench)BC and for this Hong Kong dream, I chose a position in HK that allow me to work for already 4 years here but with lower professional perspective (stable I would say) instead of a position in Shanghai that would have lead to a nice title such something of Asia.
Having the right of residency but not of abode, I am also included in this non permanent resident perimeter. Even though paying taxes, I somehow feel justice for all the locals. By living and seeing all the mess "foreigners" are doing, some protectionism feels good.
After all, after 3 years I can apply for the right of abode but will have to save a bit longer to being eligible financiary to a flat purchase. By this time hope the price will have come to normal level.
likingming
Despite the intangible core values of democracy, freedom and rule of law, HK got the followings
- High Suicide Rates (no better than that of China even with no self immolation in HK)
- Lower Birth Rate (lower than that of China even with no forced abortion)
- Higher Rate of Mental Disorder
- Fewer number of SMILING FACES on streets in HK
(dirty statistics but anybody who has experiences of living in both places could tell you)
SpeakFreely
What u said probably applied to North Korean. So are you saying North Korean is better? Some ignorant people feel happy than intellectuals so does it mean being ignorant is better ?
shouken
What does SpeakFreely mean to say "What u said probably applied to North Korean". High suicide rates and Lower Birth Rate in north Korea?
likingming just suggested that HK may not be as great a society to live in as it appears on the surface. Does he not have a right to say that? I think he makes a decent point, a point that is worth for all of us to reflect on. People may not come to work in HK (primarily or importantly) for its democracy and freedom or rule of law. Many may just come here for more money. Just like many may choose to work in the US for the larger houses and monetary benefits, not for universal suffrage.
hodfords
These latest measures are unprecedented and amounts to protectionism but nonetheless necessary given the very unususal circumstances bestowed upon us. (viz. demand outstripping supply, 0% interest rate, inflationary monetary policies from the country to which our currency is pegged, etc.)
It is also important to note that Guangzhou has even harsher measures and bans property purchase outright for foreigners who cannot prove that they have worked and lived in the city for more than a year.
aplucky1
well the hong kong dream is being shattered for a lot more locals, and caused by J and his ilk
do you really think anyone would feel for "j"
btw, how much is the tax in china
?
SpeakFreely
George and J, many people born in HK do not own a property because they couldn't afford it. Many are living in subdivided falts or rooms. they all contribute to HK for a long long time. i know some professinals who are born here and worked for years longer than "J" in HK still can not afford to buy a flat. If you can afford it and you believe your dream, just go ahead to pay 15%, no big deal. Only 15% more......
SpeakFreely
BTW George, I recalled last year you wrote a page about how to get around the tax loop, why don't you friend just do according to what you suggested? Simple. So please don't wasting our time anymore please as Policy can be made to tailor made to individuals.
SpeakFreely
George, tell your friend to be careful if buying thru companies as you suggested last week, I just saw in SCMP this morning many tax lawyers saying there is tax liability. As an accountant, I advise also your friend be aware of other debt or contractual liability when buying a shell company. It is dangerous. Why not just pay the extra 15% and come clean?
 
 
 
 
 

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