Monitor | Danger budget working group is attempt to impose new taxes

In his budget speech on Wednesday, Financial Secretary John Tsang Chun-wah said he would set up a working group to formulate "more comprehensive planning for our public finances".

This sounds like excellent news. In recent years the government's fiscal policymaking has looked distinctly slapdash. The financial secretary has consistently forecast budget deficits while actually collecting far more revenues than he needs. As a result, the government has run nine successive years of budget surpluses, which have boosted its total reserves, including the Exchange Fund's accumulated surpluses, to some 66 per cent of Hong Kong's gross domestic product (see the charts below).

Meanwhile, there has been no serious attempt to make any long-term plans for the future of Hong Kong's public finances.

So news of Tsang's working group is encouraging. Or rather, it would be encouraging if it weren't for the Hong Kong government's long history of diligently examining all aspects of a problem, consulting widely among experts in the field and carefully weighing the experience of countries elsewhere, before throwing common sense out of the window and making a truly lousy decision.

Unfortunately, judging by Tsang's speech, this may well be another of those occasions.