Seventy per cent of the middle class do not believe next week's Budget will solve the government's deficit problem, according to a survey. People also plan to cut back spending on clothes, meals and travel if taxes are increased, the poll showed. The survey, conducted by The Association of International Accountants' Hong Kong branch and Hantec Investment Holdings, interviewed 4,029 people earning more than $20,000 a month. Only 12 per cent of respondents believed the government was capable of balancing its books, while 18 per cent had no comment. 'It shows that the people of Hong Kong have given a vote of no-confidence to the ability of the government to solve the deficit problem even before the announcement of the Budget next week,' said Tommy Tam Hok-lam, vice-president of the accounting body. If taxes are increased, 43.3 per cent of respondents said they would cut travel expenses, 39.9 per cent said they would spend less on clothes and 35.5 per cent plan to reduce what they spend on eating out. 'Some 13.5 per cent of respondents said a tax increase will only push them to go to China for spending. This will be another blow to the already-depressed retail market here,' Mr Tam said. He said the government should suspend contributions to the Mandatory Provident Fund scheme for a few years to ease the burden on employers and employees. Donald Tsang Yam-kuen, now Chief Secretary, was the most admired financial secretary in the survey with a vote of 34 per cent. He was followed by Sir Charles Philip Haddon-Cave, the financial chief in the 1970s, who was famous for his 'positive non-interventionism' policy. The present Financial Secretary, Antony Leung Kam-chung, failed to get a single vote. Meanwhile, PricewaterhouseCoopers (PwC), the largest accounting firm in Hong Kong, believes the government will raise a basket of taxes to collect HK$10 billion extra revenue. PwC senior tax partner Tim Lui Tim-leung believes profit tax will rise by one percentage point to collect HK$2.6 billion more every year, and salaries tax will rise by one percentage point to get HK$500 million more. He also believes the government will increase property tax by 1 per cent, lift rates by 0.5 per cent and reduce the salaries tax allowance by 10 per cent to bring 100,000 employees into the threshold. With these increases, he believes the deficit would be narrowed to HK$40 billion for the next fiscal year, compared with HK$77 billion this fiscal year, Mr Lui said. 'This level should still be acceptable to retain the confidence of investors and credit rating agencies,' Mr Lui said.
