Hong Kong property

Tax reforms long overdue

PUBLISHED : Sunday, 09 June, 2013, 12:00am
UPDATED : Sunday, 09 June, 2013, 2:40am


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The middle class and our youth are effectively paying the highest taxes. The government prefers to generate revenue from selling land for high prices, which further drives up property prices. This will only shift wealth from the middle class further to landlords, the rich, including property developers; worsening the wealth gap.

Around half the people in Hong Kong do not own their home, this group consisting mainly of the young and the less well off. This group is further burdened by high rents and property prices that far exceed the benefits of lower taxes on salaries and daily necessities.

Among the excuses given for high property prices are the dollar peg, low interest rates and external macroeconomic factors. A lack of land supply, thereby reducing land sales, is blamed on the previous administration. These mitigating factors seem to justify high property prices, but can be corrected with tax reforms and redistribution.

Hong Kong's free-market policy means there is no inheritance tax, including on property; no restriction on the number of properties it is permissible to own; low tax rates on income from rental returns for landlords; no capital gains tax; and zero duty on yachts, luxury items and expensive wine.

Hong Kong now is no different from feudal times, with rich landlords collecting rents from the many who slave away, just barely surviving. With bitter smiles our youths hold shopping baskets at the entrance of luxury-goods and duty-free shops, welcoming well-off mainland shoppers. Those fortunate enough to get on the property ladder become mortgage slaves. University graduates start their working life hugely in debt from education loans, while the elderly wait for weeks seeking public health care. Many less fortunate live in subdivided flats and some in cage homes.

I'm not scaremongering. Hong Kong is going through a transitional stage. Discontent is rife due to inequality in wealth distribution. Those who oppose the government should focus on specific internal issues such as tax reforms, home ownership, and adjusting the dollar peg, and not aiming just to be an antagonist of any kind. We are experts in blaming the ills of society upon external factors, the central government, or mainlanders.

Will universal suffrage or democracy enable us to transfer taxes to the rich? The property tycoons and rich landlords will fight tooth and nail to protect the low- tax regime and so-called free market. But remember what John F. Kennedy said: "If a free society cannot help the many who are poor, it cannot save the few who are rich."

Bernard E. S. Lee, Tsuen Wan