Stamp duty hike raises fears that Hong Kong does not know where it is going

PUBLISHED : Wednesday, 23 November, 2016, 5:01pm
UPDATED : Wednesday, 23 November, 2016, 8:55pm

We all know and regret that the Hong Kong government has been frozen in the headlights of local political issues. But it must look beyond these local minor issues – by minor, I mean that the real authority in Beijing will not tolerate any attempts to challenge its authority – and rightly so.

Hong Kong must move forward and find a new raison d’être – the city is no longer a manufacturing centre, nor does it have an unchallenged entrée to China.

It needs to develop a justification for its existence. So far, it has failed to do this. Its IT industry is a joke by comparison with that on the mainland, but Hong Kong still retains its trusted status and standards due to its independent legal processes. So why has the government not created the SAR as a centre for services, that is, education and medical services?

Both these sectors would be perceived as huge attractions for people on the mainland – the quality of Hong Kong’s services are and would be highly sort after.

But the imposition of the outrageous stamp duty taxes on the purchase of residential property, of 15 per cent for local residents (investing in a second home), and 30 per cent for overseas investors, has only aggravated the fears that Hong Kong does not know where it is going.

The government has no need of the additional income, however, it is imperative that it finds a role in the overall economy of China.

If the government wants to cool the market, it should increase the supply of land for residential developers and, most importantly, maintain its reputation for being a stable, reliable and open economy by acting rationally with respect to taxes.

Hong Kong must be seen to be attractive for local residents and overseas investors. The exorbitant stamp duty rates should be reversed as soon as possible.

David Paterson, Mid-Levels