• Thu
  • Dec 18, 2014
  • Updated: 8:03am

Financial Secretary John Tsang hints one-off budget relief measures may be withdrawn

Tsang prepares for keynote address by hinting one-off relief may be withdrawn to tackle the challenges ahead as global outlook improves

PUBLISHED : Monday, 10 February, 2014, 4:31am
UPDATED : Monday, 10 February, 2014, 2:01pm


  • Yes: 62%
  • No: 38%
10 Feb 2014
  • Yes
  • No
Total number of votes recorded: 271

Financial Secretary John Tsang Chun-wah has dropped the strongest hint yet that tax reductions and one-off relief measures will "very soon become history" as the global economy improves.

He made the comments as a government source told the Post that the middle class should expect fewer "sweeteners" when Tsang delivers his budget on February 26.

Writing on his blog yesterday, Tsang said one-off relief measures, such as salary tax reductions and rates waivers, were introduced to help the public in difficult times.

Three years ago, adult permanent residents were given HK$6,000 each and Tsang offered a HK$33 billion package of relief measures in last year's budget.

But he wrote: "I hope people can understand that these measures … are defensive ones [introduced] at a time when the external economic [conditions] were unstable. When [things] start to stabilise gradually, we should cancel these one-off measures step by step. Judging from the current situation, this day should be coming very soon."

The government source said Tsang was under pressure to maintain a healthy fiscal balance and prepare Hong Kong for the challenges ahead as the population ages rapidly. "The cut in expenses will have to be across the board," the source said.

Relief measures might also be cut for families on low incomes. These could include the two-month exemption on public housing rents that have been a feature of recent budgets.

But the middle class, already upset about being ignored in the chief executive's policy address last month, are expected to be complaining again.

The benefits given to the middle class come mainly in two forms - a reduction in salary tax and rates waivers. The source said the government may scrap or scale down the rates waivers, which would save the government between HK$4.2 billion and HK$11.7 billion a year.

It is also thinking about dropping the HK$1,800 annual electricity subsidy for each household, which cost the government close to HK$4.5 billion last year.

Tsang is expected to tell the public in his budget speech that the city's HK$734 billion fiscal reserves could dry up in 20 years if nothing is done to lessen the financial burden.

Dr Li Kui-wai, of City University's department of economics and finance, said cutting the rates waivers and electricity subsidy would not greatly affect the middle class. "Only 40 per cent of Hongkongers own a flat. Waiving a fee of about HK$200 per month is not a big deal. They would spend it all on a trip to Macau or even just a meal," he said.

Li supported the decision to cut "Santa Claus-style" one-off relief measures, which he regarded as a "superficial political tool".

But Ivan Choy Chi-keung, a political analyst at Chinese University, said it would trigger a backlash from the middle class. "They [officials] should get ready for the political cost," he said.

Additional Reporting by Tony Cheung


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This article is now closed to comments

The idea of a one-off measure is that it only occurs once, or perhaps in this case: valid for one (tax) year.

"Withdrawing one-off measures" is a contraction in terms. Anybody who finds it surprising or even just newsworthy that one-off measures are not continued more than a single period never understood the meaning of one-off in the first place.
Since the introduction of 'sweeteners' in 2008, if I remember correctly, there has been speculation every year in the weeks preceding the budget on what the sweeteners will be. TSANG can only blame himself for raising expectations so he will be having a hard time withdrawing them. For the middle class, I believe, once the economy stabilises, tax rebates should be the exception rather than the norm. However, the allowances need to be visited annually to fit in with the times and adjusted accordingly. Calling these sweeteners is wrong. The electricity rebate should be scrapped but the government should get its act together and not let the 2 power companies collect abnormal profits. The 2-month waiver of public housing rents is ridiculous as it is also granted to 'wealthy tenants' who live on public housing. With CY's initiative churned out in the Policy Address, something is being done and primarily targetted at the poor. Public housing is relatively cheap in terms of rental so I wouldnt consider a waiver as necessary. Neither are the waivers on rates where they only benefit greedy landlords.
My recommendations to FS are as follows:
1. Instead of scrapping or scaling down the rates waivers, the Government should consider repealing rates collection altogether since rates in Chinese is translated to (or understood to be) as payment to police (差餉) and is now financed from general revenue. To the aggrieved Middle Class taxpayers who own mortgaged home, rates payment virtually means double taxation to them.
2. To help the lower income taxpayers, the salaries tax reduction by waiving the first $12,000 tax (already effective for the last four years) should now be permanently incorporated in the tax rate table under the Inland Revenue Ordinance (Cap 112) Schedule 2.
3. The Government has been wrong in last few years’ budgets in granting the two-month exemption on public housing rents since these people have long been the most benefited group of the housing system of Hong Kong. To honour or compensate for Government’s promise of three-year (at most) waiting period for public rental housing, those who are in the waiting list of public rental housing for three or more years should more appropriately be granted the two-month public housing rentals.
What is wrong with JT? Reportedly, the current year surplus is $65 billion (a far cry from his speech last year projecting a deficit of $5 billion) ... so JT is going to cut spending so that his mountain of cash can grow faster??? Its illogical and poor planning.
If you are going to cut (giving back money to the community) then show us some future projection of deficits and also say what you are going to cut in those future years!
There is no immediate need to reduce the sweeteners this year considering we will have a mega surplus again.
Doing so now is a political statement from Tsang and amounts to a slap in the face to CY Leung: the money to pay the poor will come from the middle classes and not from his reserves.
The preview if there are sweeteners for the middle class is a mighty insult to the middle class. Neither should it be a pillar to Hong Kong’s financial well-being. What society is expecting from the budget speech is what long term measure and policies will there be. No less what plans are in stall after the warning that the fiscal reserves could dry up in 20 years.
But never mind what our Financial Secretary is going to speak, the messenger shouldn’t be the message. The message should belong to the Chief Executive CY Leung’s policies. We shall focus on Leung instead.
Tell us so John Tsang if you disagree -- you are your own boss and not to CE, civil servants or property developers.
Logical step though caution is recommended as there are some needy people who deserve some relief! So, a selective withdrawal of relief measures would be appropriate. For example, rental subsidy to public housing tenants could be halved, and subsidised electricity charges and rate waiver could be extended to senior citizens living alone on their own.
To swami.
Any changes or new moves must be seen in the context of part of policies directed by the CE. Your laudable suggestions are no exception. It is totally meaningless however, to just count our beans while ignoring a larger picture which is duty bound for our CE to execute. That is to say, FS should work under CE.
The one who pulls the purse string has the largest say has outlived days for that job. Please don’t pretend it is still so -- money are not being repatriated to Britain or Central government or even the federal government in US for argument sake. Hong Kong has surplus from unjust means that waiting to be spent.
Paying six figures for salary in US dollars to be lead by a piper of no value is not how surplus should be used because the job has passed its time for usefulness.
So my god, why are we so stupid to be so supple? And who is so clever to pocket our FS.

with that kind of $ we can have more public hospitals and schools.. last wk I sent my wife to Prince of Wales Hos and the emergency priority waiting list was like 8 hrs.. no more hands plz!!!
How about the gov't stop its high land price policy? That will pretty much be a big boost to everything except property related industries and over leveraged owners. I forgot they made up nearly half of the local population.


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