15 per cent stamp duty
To rein in the city's runaway housing prices, Hong Kong's Financial Secretary John Tsang Chun-wah announced an additional 15 per cent stamp duty on non-permanent-resident and corporate buyers starting from October 27, 2012. The move prompted speculation over the effectiveness of taxation on the real estate market and criticisms that Hong Kong was turning away from its roots as a free market economy in favour of a more protectionist market environment.
City could suffer from steep levy
Hong Kong has for many years traded on the idea that it is Asia's global city, a welcoming home and gateway for foreign business to work in China and Southeast Asia.
It is the equivalent of London for Europe, New York for North America and Dubai for the Middle East.
However, recent government policy appears to suggest a lack of appetite to maintain this position, against rivals like Singapore and Shanghai.
The administration's approach to the tax on property is a good example.
The tax levy on properties resold in less than three years is good, clearly focused on speculators. But what is the function of the tax on foreigners buying property? This will make the cost of living for foreign staff of international businesses even more expensive.
I am director of an international business with more than 1,000 staff in Hong Kong and the mainland.
Coming on top of the spiralling costs of education, this is going to make the cost of doing business in this city even more uncompetitive. Foreigners and their employers can always vote with their feet and Singapore must be laughing.
This tax is not only an attack on professional foreigners but yet another insult from this little city towards mainlanders.
If Chinese wish to spend time and money here, why are we so constantly desperate to turn them away?
Foreign businesses are based in Hong Kong not only to do business with the people of this city but also the much larger market to the north.
If Hong Kong wants to close its doors to this market, then international business will have no option but to relocate to where that market is.
So Shanghai must also be laughing.
But perhaps the government and people of Hong Kong don't wish to be a global city anymore?
Perhaps they are happy to leave that to Singapore and Shanghai to compete for.
However, if that is the case, what do they see the future of Hong Kong to be?
Other than trade, it has absolutely nothing to sustain itself. All it will have is a spoilt and ageing population led by an ineffectual government, who only have inflated ideas of their past glories to bring them any comfort.
You only have to look to Japan's current plight to see where that will take this tired old city.
But on the plus side, expect house prices to come down substantially.
Fraser Milne, Sai Wan Ho