Abraham Razack is not standing up for the common man on stamp duty
It's amusing to watch Abraham Razack, our much-maligned tycoons' man in Legco, threatening fire and brimstone in hell for the government unless it reverses course on property cooling measures.
The measures, he claims, penalise locals. Really? The guy who has devoted his entire career to defending the rights and privileges of the rich and powerful has suddenly taken an interest in the common man. That sounds almost like a religious conversion. Well, not quite.
What really irks him, other pro-business lawmakers and even one or two democrats, is a new anti-speculation measure that taxes local corporate property buyers more than private buyers. The new buyer's stamp duty, introduced last October, requires overseas or corporate buyers of local properties to pay 15 per cent of the price as tax on top of the existing stamp duty and a special stamp duty.
Razack and the rest of the Legco gang want local corporate buyers to be exempted from the new stamp duty.
But the whole point of the rule is that it closes a previous loophole which significantly contributed to speculation and the property bubble.
Instead of buying and selling flats, the loophole allowed speculators to buy and sell companies, with the flats as the assets, usually the only assets. They thereby avoid paying any stamp duty at all.
The new measure should have been introduced years ago to close this glaring loophole even if there had not been a property bubble.
For obvious reason, this has angered the property cartels, real estate agents and their bosses, and those lawmakers who are in their pockets.
One way they are fighting the government is to engage in scare tactics, warning that property prices will crash under the new measures. They understand that if prices start to fall drastically, many middle-class flat owners will join their cause. However, so far, only sales volumes have gone down, while prices have not fallen. This means the government is actually in a sweet spot.
Its anti-bubble measures are needed. Don't let those property lackeys fool you. So long as prices hold up or fall only gradually, the government has popular backing.