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Monitor
PUBLISHED : Friday, 23 November, 2012, 12:00am
UPDATED : Friday, 23 November, 2012, 2:31am

Four more ways officials break the spirit of Hong Kong's Basic Law

From the new discriminatory homebuyer's stamp duty to schools funding, the government is not living up to the city's constitution

I confess I am not as familiar with Hong Kong's Basic Law as I probably should be.

I'm sure it's a worthy enough document. But 100 pages of constitutional promulgation is not my idea of an entertaining read.

South China Morning Post readers are made of sterner stuff. In the past few days, a number have written in to point out three areas in which the recent behaviour of the Hong Kong government appears to be in direct contravention of the city's mini-constitution.

First, there is the way the government jacked up its special stamp duty last month and slapped a punitive buyer's stamp duty on non-resident purchasers of local homes.

From now on, anyone selling a residential property within six months of buying it will be hit with an extra 20 per cent tax on the sale. If you sell within a year, you will pay 15 per cent, and in less than three years, 10 per cent.

In addition, all companies and any individuals who are not Hong Kong permanent residents buying a home in the city will now have to pay an extra 15 per cent tax on their purchase.

These steps, ostensibly aimed at quelling speculation, follow the government's decision in September to restrict home sales at some new developments to Hong Kong permanent residents only.

Several readers have pointed out that although these measures might be popular, they appear to run contrary to Article 105 of the Basic Law, which obliges the government to "protect the right of individuals and legal persons to the acquisition, use, disposal and inheritance of property".

I can't say whether the government is in breach of the letter of the Basic Law. That would be up to a court to determine.

But by imposing discriminatory taxes on some people and on companies - legal persons in the jargon - the government is effectively restricting their freedom to buy and sell on equal terms with everyone else. That clearly breaks the spirit of Article 105.

Next, there is the government's lamentable failure to meet its own modest targets on air pollution; a failure dissected in toe-curling detail by the Audit Commission in a report published last week.

Considering that these targets were introduced 25 years ago and that in that time Hong Kong's pollution has only got worse, to the grave detriment of the people's health, one reader wonders whether this failure places the government in breach of Article 119 of the Basic Law, which requires it to "pay regard to the protection of the environment".

Again, a court would have to decide on the letter of the law, but reading the Audit Commission's report, no one can doubt that the government has paid zero regard to the spirit of Article 119.

Then another reader notes Eddie Ng's letter to the Post earlier this week about government funding for the English Schools Foundation.

In his letter, the education secretary declared that "ESF schools offer a non-local curriculum. It is not our established policy to provide recurrent subvention to schools offering a non-local curriculum." Therefore, "the existing recurrent subvention will be phased out".

Given that the government has funded the ESF since 1967, our reader notes that terminating the subsidy now will clearly contravene Article 144 of the Basic Law, which obliges it to "maintain the policy previously practised in Hong Kong in respect of subventions for non-governmental organisations in fields such as education".

In addition to those three ways, the Hong Kong government appears to be breaking the Basic Law, off the top of my head I can think of at least one other.

Article 107 declares that the government should "keep the budget commensurate with the growth rate of its gross domestic product".

Yet in his latest budget speech delivered in February, Financial Secretary John Tsang boasted that "for my five budgets, I have increased government expenditure by nearly 70 per cent. This exceeds GDP growth of 21 per cent for the same period."

What's more, over that time, the Hong Kong government ran a cumulative budget surplus of HK$300 billion, which implies it couldn't have been taking seriously its Basic Law obligation, also under Article 107, to "strive to achieve a fiscal balance".

I have no doubt that in each of these four cases the government could argue it is in perfect compliance with the letter of the Basic Law.

But it is hard to escape the impression that our officials are riding rough-shod over the law's spirit.

That's not good enough. Hong Kong's government has a duty to obey both the spirit and the letter of the Basic Law.

Now I'll have to sit down and read the damn thing to see where else the government is failing in its duty.

tom.holland@scmp.com

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This article is now closed to comments

kenny4600
You are quite hopeless I have to say mate. You claim it is up to the court to decide whether there is a breach, yet you claim what the Govt has done appears to be not consistent with the Spirit of the law. You assume running contrary to the spirit of the law is not a breach. This reasoning is just ludicrous. I don't see any value this article I'm afraid to say. No value in any legal sense, nor any economic value. It is a waste of your time, your readers' time and a waste of the space on SCMP.
shouken
Tom, do you have a kid that is going to a ESF school? Some disclaimer is needed.
basicblue
The only BASIC LAW is coming out of Beijing.
Shadow
waste of poeple time by commenting here
every thing reaching to them in close envelopes just open and read not dare to discuss
what a useless debate you are doing
xiaoblueleaf
It seems there is confusion with regard to any constitution of the "right" of governments safeguarding the rights of the individual citizens as to imposition of taxation and/or administering subsidy or its abolishment as adminsitrative measures.
SpeakFreely
I hope Tom and all analysts will come out to declare they have no conflict of interest in this new property tax as Ive just saw on news developers are lobbying government are pushing for exemptions....yet they all claimed the new rule will not help controlling rising price.
captam
Error. Sorry please delete post.
chaz_hen
Seriously?? "beneficial to HK residents"??
Face it...the homes being sold and getting hit with this tax are multimillion dollar luxury homes being purchased by mainland billionaires. This is not a dent into their pockets and they would not be buying anything the average HKer could afford anyway. It will not affect the overall property market. If anything, it'll just make über luxury homes all the MORE expensive.
So how is this beneficial at all to HKers?
As with ALL policies in HK these days, it is not clearly thought out, in knee-jerk response and handled unprofessionally by inept officials.
I feel sorry for the HK people.
boondeiyan
Worthwhile observations, all. Now where are the checks and balances to ensure that these potential constitutional conflicts are addressed by the government itself or the courts? Next column, I hope.
SpeakFreely
It is naive to believe there is a breach and wealthier developers are not challenging the government in court! Come on! Recently I believe one developer challenged the government successfully on a particular use of land. For this big tax and affecting their sales so much, why wouldn't they fight for it? In any case we have too many lawyers or analysts fighting for the constitution benefiting the wrong guys but ignoring the poor coffin homers or poor middle class, does it make sense?
SpeakFreely
Tom, if the extra tax rule is breaking the basic law, I'm sure the developers will take the government to court, don't worry. All these property analysts including yourself, I guess suggesting the extra tax will have no impact on price but look at developers now can't sell their new properties and now selling all parking space, what does it tell you all? Yah, you all claim it is supply and demand, but many of you forgot the demand also comprising the biggest element is people driven to snap up properties with the expectation flat price keeps going up quickly. With that expectation contained the "demand" will be on hold or reduced. That is one thing you guys forgot or choose not to discuss as many analyst has conflict of interest. What about 100% extra tax? Will it work? Dare to try it?
I've to declare I am a landlord but I condemn these crazy speculations.
SpeakFreely
Further to those against the new tax will impacting HK financial international image, pls keep your mouth shut. Singapore and I believe Australia is doing the same, what's the problem? Also, as foreign investor, except those speculators, would like to see the operating costs in running biz in HK will be under control, therefore they won't against the law. No brainer. All u guys say against the tax rule have conflict of interests either you work for developers in the biz or sponsored by them!
mcheung
Well said about operating costs control in business without property speculations. What's the benefit of a good financial image when the average HK worker can't find a decent and affordable place to live?
chaz_hen
Ironic, isn't it? Your handle is "speak freely", yet you tell people to shut their mouths if their opinion is not to your liking.
What's next? If you don't like it, then move out????
cwbeijing
I belief the extra stamp duties and tax are beneficial to Hong Kong residents. Prices has spiral to unrealistic level detrimental to social stability.
These regulation may be in-breach of basic law but basic law are made years ago without knowing the current situation.
likingming
The HK govt has the mindset of making money and accumulating huge reserves from her own people. Apart from the Govt Associates (tycoons, civil servants, welfare dependants, licensed monopolies), all other non-associate ordinary people are most likely to be exploited.
HK is a rich financial centre for the rich and the vested interest. The majority poor have to suffer with long working hours (or two jobs) and live in poverty. Vote with your feet and leave HK for china where there is more opportunities.
 
 
 
 
 

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