• Sun
  • Dec 21, 2014
  • Updated: 9:11am
My Take
PUBLISHED : Thursday, 27 March, 2014, 4:45am
UPDATED : Thursday, 27 March, 2014, 4:45am

How Hong Kong's government subsidises those who need it least

We hate the poor and favour the rich and well-off. The way our government has favoured our tycoons and helped them to unimagined fortunes is well-known. Far lesser-known is how much we have directly subsidised the middle and upper-middle classes since 2004, mostly through property-related concessions.

That's why a new analysis by the Legislative Council Secretariat's research unit on so-called sweeteners given out in the last 10 budgets is a must read for Hongkongers, many of whom seem to have a certain idée fixe about the poor being lazy and living on public largesse. But who benefited most from sweeteners? Not the poor or low-income groups. Not taxpayers or small- to medium-sized companies. Roll the drums please: It's private flat owners. Since the government consistently overestimated expenditure and underestimated revenue, it has faced an embarrassment of surpluses every year in recent time. Since John Tsang Chun-wah became finance chief in 2007, he has underestimated revenue by a total of HK$582 billion. As one-off sweeteners, he has given back HK$220 billion.

Of the HK$220 billion, 28.7 per cent went to property owners and 23.5 per cent to taxpayers. Only 3.9 per cent was given to low-income groups and another 7.6 per cent to disadvantaged groups. Bear in mind that while we saw during this whole period one of the greatest bull runs for the local property market, our government, guided by the financial wisdom of Mr Tsang, has directly subsidised the segments of our population that needed the least welfare support, primarily through rates waivers and property tax reductions.

This is obscene not only because the undeserving got the most public subsidies, but that Tsang's pseudo-financial prudence wasted our surpluses that could have been used to invest long-term for Hong Kong's future. Might we not have more and better schools, hospitals, universities, healthcare services and retirement funds? No. Instead, to cement his legacy, Tsang now poses himself as the prophet of fiscal rectitude against future structural deficits from out-of-control spending on education, welfare and healthcare.

Here's a man who never deviates from singing the same tune.

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This article is now closed to comments

impala
Geez. This outcome is exactly what you would expect if you would have your executive council appointed by the rich and powerful and your legislative body elected for a majority by the same establishment. What a coincidence!

The root cause of Hong Kong's poverty and mind-boggling inequality is very simple: a systematic misallocation of resources, and a protection of vested interests at the costs of those in the lower half of the income scale. And this is made possible solely by our distorted system of government, in which it is not one-man-one-vote, but one-man-one-vote-and-another-man-47-votes (roughly the heavier weighting an average functional constituency vote has over a geographical constituency one).

Regularly, Mr Lo writes about the plight of our urban poor, our large numbers of destitute elderly and other third-world disgraces for what pretends to be a modern, developed society. Bravo.

Yet, equally or more often, he writes to defend the autocratic, anti-democratic, kleptocratic powers that are directly responsible for this. Worse yet, he attacks those who are striving for a more representative system of government, and then has dinner with the powers-that-be in government house.

Tell us Mr Lo, when you were dining with CY & Co, did you ask what they were going to do about their hugely wasteful and obviously misallocating budgets? Did you? For anything else, just makes you an philosophising armchair hypocrite.
mymak
This 'comment' lacks real substance Alex. You brand the middle-class as undeserving and argue that a Bull market means property owners are now all rich and greedy. We actually know that pricing for housing is too expensive in Hong Kong partly as a result of past Government failings, part as a result of speculation by non Hong Kong residents and part as a result of the greed of local property companies. The middle-class Alex are struggling to make mortgage payments and do not qualify for Government or subsidized housing. The middle-class are unable to realize the paper profits on their properties. Everyone needs somewhere to live. Now they are branded as undeserving.
Yes, we should have better schools, better hospitals, better childcare facilities, better retirement funds, etc. but don't try to do it by stepping down on one part of society. We all need to work together to achieve such things in the face of an autocratic government that only gives us better roads, bridges and railways as a panacea to all our problems.
HK-Explorer
rate wavers and tax breaks are not giveaways. If the government has a surplus they should not take the money. Taxes are to pay for expenditure not to take for the sake of taking. Not taking does not = giving.
People in government housing are being given a gift as they don't pay for the house or the land it is on. The don't pay rates.
If the value of government housing was calculated into the equation you would easily see people in government housing get way more.
pslhk
HK housings are half public and half private
-
Public housing tenants virtually enjoy free accommodation
the rent they pay can’t even cover maintenance
Who pay for the shortfall for public tenants to own MB and BM?
-
Private housing owners are not all debt-free billionaires
Many have backbreaking mortgages for self-use or investment properties
because of their confidence in and commitment to HK
-
So what is AL’s complaint?
chuchu59
There will always be some middle class taxpayers who don't deserve a cent in aid. Likewise, there are also many well-off people living in public housing who as pslhk said, own Mercedes-Benz and are virtually debt-free. AL should not tar all middle class house owners with the same brush. Surely owners of multiple properties who deem themselves as middle class are unworthy of rate waivers and the like. Others who work hard to pay off their mortgages are a different breed and deserve a bit of help.
johnyuan
That hundreds billions I suspect are proceeds from luxury flats sold to mainlanders. The money that already spent by the government included putting it in the pockets of property owners in Hong Kong and little for the poor and less wealthy (not property owners). I like not crying over the spilled milk but to see the give away to do some good for Hong Kong.
.
I see the give away as the payment (first installment perhaps) to reimburse property owners by government for their flats which included land cost charged by the government. Government is beginning to wipe their revenue income dependency clean from selling property. Government should institute a general sales tax that is designed with different rates favorable (least) for the basic necessities.
.
Without refunding the property owners, any new form of tax levied I see it as charging property owners twice. I would like to see Hong Kong government move away from land dependency for revenue otherwise how many land is still suitable for sell for property development down the road?
xiaoblueleaf
What about income & profit tax for individuals & corporations at incremental rates? What about
absence of unemployment insurance & benefits? What about absence of social security? Never
mind about universal suffrage, democracy blah, blah , blah. Hongkongers aere supposed to be
part of the great socialist system:(
ubifrancehk
Excellent post, thank you for writing this !
 
 
 
 
 

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