Letters | Hong Kong property: raising tax rates on rental assets is unfair

Rental properties are retirement funds for many Hongkongers, given the city’s meagre Mandatory Provident Fund returns and lack of pension
If retirement assets are to be taxed, should the government consider taxes on MPF, bank savings, stocks and bonds holdings as well to be fair?

Hong Kong economy

Letters

Published: 6:45am, 2 Mar 2021

Why you can trust SCMP

The idea of raising rental property rates from the current 5 per cent to as much as 15 per cent under a progressive model hurts Hong Kong retirees, the middle-class and the poor alike.

The active rental market serves a social purpose due to the high property prices. It enables the younger generation to rent, save money and start a home. Many prefer to rent rather than buy a costly flat. Raising the overall rental cost will hurt the people we are trying to help.

Rental properties are retirement funds for many Hongkongers, given the city’s meagre Mandatory Provident Fund returns and lack of pension. When banks pay zero interest and the stock markets remain volatile, many retirees wisely invest in a rental property as their pension. Despite its low yield, it is considered a “safe” and inflation-hedged asset. If retirement assets are to be taxed, should the government consider taxes on MPF, bank savings, stocks and bonds holdings as well to be fair?

In addition, rental properties are already doubly taxed under government rates and rental income tax, while most Hong Kong companies pay only profit taxes. Should the government also consider taxing company gross assets too? It is unfair to tax one type of business doubly but not others.

To its credit, in recent years, the Hong Kong government has succeeded in eliminating short-term property speculation by imposing a massive 15 per cent stamp duty on second purchases and a capital gains tax on short-term trading. There is almost no unchecked speculation in the Hong Kong rental market. Rental rates have sharply declined in recent months in line with the economy, as they have been adversely affected by the pandemic, protest activities and outward migration.

The government should instead consider raising taxes on the top 1 per cent, some of whom pay no tax on dividend income and capital gains, versus the remaining 99 per cent paying up to 17 per cent in salaries taxes. This is more in line with the global trend, too.

Thomas Chow, Sha Tin

China has beaten poverty, as Hong Kong waits in line

I refer to your correspondent Tai Kin Haang’s comments that the voucher and preferential loan schemes announced in the budget have almost zero benefit to the elderly and the jobless (“Hong Kong budget: hardly a bonus for the jobless or elderly”, February 26). Residents stand to receive only HK$1,000 per month for five months under the consumption voucher scheme, while unemployed workers will have to repay the promised loan, capped at up to six times the last monthly salary or HK$80,000. This is hardly going to ease the recipients’ psychological pressure.

A single person living in public housing would need HK$6,000, on top of travel expenses, to survive. The government’s relief measures must complement the welfare schemes to have a genuinely positive impact, otherwise our financial chief’s talk of caring is superficial and mere rhetoric. More importantly, Paul Chan Mo-po should design or borrow a sustainable enrichment programme to demonstrate his abilities.

Chinese President Xi Jinping, at a recent ceremony in Beijing, said his country has achieved the “miracle” of eradicating extreme poverty. Ironically, extreme poverty is still in evidence in Hong Kong, although it prides itself on being the most prosperous city in China.

10:00

Homeless in Hong Kong: life on a footbridge

In Central, where I work, the elderly used to be seen everywhere performing manual labour – shoe-shining, cleaning and offering deli services – but many have vanished, presumably stuck at home without an income now. They must all be desperately hoping President Xi’s helping hand will stretch down here to help them regain their lost self-esteem.

While our financial secretary has just slipped Hongkongers a little money, it is hardly a sweetener.

Edmond Pang, Fanling