Monitor | How to make two problems worse with just one policy
Higher taxes for homebuyers will merely make property prices even more unaffordable, while adding to the government's unused cash pile
Anyone who has followed the headlines in Hong Kong over the last few weeks will know two things: one, homes in the city are blisteringly expensive; and two, the Hong Kong government has money coming out of its ears.
First: the property market. Home prices have doubled in the last four years. As a result, a typical Hong Kong family would have to save every cent it earned for 14 years in order to pay for a typical flat in the city.
Even the minimum downpayment on a mortgage would eat up four full years of household income. It's no wonder people are protesting.
Second: government finances. When he stands up to deliver his budget speech on Wednesday, financial secretary John Tsang is expected to announce a budget surplus for the current fiscal year that, by the time all the numbers are in, is likely to top HK$50 billion.
Added to the spare cash squirrelled away in the Exchange Fund, that will bring the government's accumulated reserves to almost HK$1.4 trillion, or 70 per cent of the city's gross domestic product.
Confronted by these two problems - unaffordable properties and a super-abundance of government cash - last week the financial secretary came out with an idea that in one stroke manages to make them both worse.