Banker and working poor both disappointed by John Tsang's budget
Banker Ricky Leung, a father of two children who earns HK$110,000 per month, says he is disappointed the budget did not 'beef up' its help for middle class families like his
Holidays and posh meals are likely to be off the agenda for father-of-two Ricky Leung, who dismissed the budget as an "absolute disappointment" that had nothing in it for the middle class.
The 38-year-old banker earns HK$110,000 a month but he expects it will get increasingly hard to pay for luxuries after Financial Secretary John Tsang Chun-wah scaled back relief measures.
One of the biggest negatives for him will be property rates on his Tai Kok Tsui flat, which had been waived since 2010. This year homeowners will have to pay rates for two quarters of the year.
Leung said a HK$2,000 increase in the tax allowance for families with a dependent parent or grandparent to HK$40,000 would have a minimal impact even though he would receive the full allowance. Leung, whose children are six months and two years old, would have preferred to see the child tax allowance of HK$70,000 increased.
The electricity subsidy of HK$1,800 per household, the measure Leung said he had most wanted to see retained, was scrapped.
"I'm absolutely disappointed by this budget," said Leung, whose family paid HK$350,000 in taxes in the last financial year.
"Elderly people spend less money than children do. Expenses like insurance and education will grow, but there was no mention of them in the budget. I believe middle class families with children, like mine, will feel the most pain."
He had hoped that Tsang would offer cash handouts or lower tax rates. Leung will again receive a salaries tax discount of up to HK$10,000.
"The government is still taking care of the middle class, but definitely the help wasn't beefed up," Leung said.
He said Tsang, who has warned of a need to balance the government's books amid concerns of falling income and growing expenses, was not doing enough for families that had stayed in Hong Kong during the uncertain years even when they could have gone elsewhere.
"Many in my generation still have children, because we have confidence in society and want to live here," he said.
CPA Australia said the budget fell short of its expectations on relief for the middle class. To support the middle class more, it proposed further tax reliefs measures, including increasing the personal allowance and child allowance. The allowances should be linked to the Consumer Price Index, it added. It said the child allowance should be raised to HK$200,000 per child in the year of birth and that medical insurance premiums up to HK$20,000 should be deductible.
Yung Wai-yan, whose family of four lives on just HK$10,000 a month, says that like many of the city's working poor, there was nothing in the budget for them
The financial secretary's poverty relief measures were a bitter blow for Yung Wai-yan - her family do not qualify for any of them.
"I'm extremely disappointed. I don't think we get anything," said Yung, 39. Recurrent welfare expenses were forecast to reach HK$56.9 billion in 2014-15, up 9.7 per cent from the year before. Welfare, along with education and health spending, will take up almost 60 per cent of the government's recurrent spending.
Yung, her husband and their two children live on her husband's HK$10,000 salary. The family is not on Comprehensive Social Security Assistance so do not benefit from John Tsang Chun-wah's extra month of basic allowance for recipients. And the family is still in the queue for public housing, so won't benefit from the rent-free month for tenants. No family members are over 60 years old, so no one will benefit from the extra month of old age allowance, old age living allowance nor the disability allowance.
"We were hoping that the government could speed up the process of building public housing, but that did not happen," said Yung.
Tsang said this year's budget focused on raising the city's competetiveness, but Yung's hopes of receiving more support, especially for child expenses, were dashed. Resources were allocated to deal with youth employment and elderly care, but no extra money was set aside for the education needs of grass-roots primary-school-age children.
Yung's nine-year-old son was found to have two holes in his heart last year and needed to go in and out of hospital, while her five-year-old son was diagnosed with an intellectual disability and will need to attend a special school. "I had hoped for more subsidies for their schooling expenses, like books and extracurricular activities," she said.
None of the tax reductions apply as the family's low income is already tax exempt; last year's electricity bill subsidy was not extended; and Tsang did not inject more funding into food assistance programmes, which Yung said accounted for most of the family spend apart from their HK$4,000 rent.
Yung hoped a financial plan would be drawn up for a low-income family allowance and was disappointed to see it was instead scheduled for next year. "So we don't get it now? What exactly do we get then?" she said. "Our current situation is really tight. I'm not sure if I could handle it, especially since my younger one may need more care now that he's been diagnosed."
Yung may qualify for the Community Care Fund supporting mentally disabled children's rehabilitation services.
- 75 per cent waivers on salaries, personal income and profits taxes, subject to a ceiling of HK$10,000
- Property rates waived for two quarters, subject to a ceiling of HK$1,500 per quarter
- Tax allowance for those with dependent parents or grandparents raised by HK$2,000 to HK$40,000 (for dependents aged 60 or above), or by HK$1,000 (for dependents aged between 55 and 59)
- Recipients of Comprehensive Social Security Assistance, Old Age Living Allowance and Disability Allowance receive an extra month's payment
Long-term fiscal stability
- Consider a "future fund" to finance infrastructure projects at times of sustained budget deficit
- Propose increasing more than 200 government fees to raise HK$60 million a year
- Review other fees, including charges for water, leisure facilities and environmental hygiene services
- Put 34 residential sites into the land-sale programme for the coming financial year so 15,500 private flats can be built
- Put seven commercial and industrial sites and one hotel site into the land sale programme for the coming year
- Waive stamp duty on the trading of all exchange-traded funds
- Issue a fourth batch of inflation-linked iBonds, worth up to HK$10 billion
- Develop six sites adjacent to the Kai Tak Cruise Terminal as a hotel cluster
- Reserve HK$50 million for the development of tourist attractions, including three-dimensional projection shows on the Victoria Harbour waterfront
- Earmark HK$24 million a year under the Innovation and Technology Fund to finance research and development projects at six universities
- Double the number of free public Wi-fi hotspots to 20,000
- Earmark HK$30 billion for waste recycling and treatment facilities, including the construction of an incinerator and the expansion of three landfills
- Complete a planning and investigation study on the construction of a seawater desalination plant in Tseung Kwan O by early next year
- Increase tobacco duty by 20 cents per cigarette, or HK$4 per pack of 20
- Earmark HK$160 million for the improvement of services at centres for the elderly, including HK$22 million to increase manpower to provide support for dementia patients and their carers
- Earmark HK$120 million for 950 additional subsidised places at residential care homes