7 hits, 7 misses and 7 ways Hong Kong’s budget could affect you
A bounty of one-off goodies, greater financial commitment to the needs of an ageing population and measures to improve social stability, after a year of protracted “political bickering” – that in a nutshell was the budget that Financial Secretary John Tsang Chun-wah announced on Wednesday. Some measures were expected, others a surprise. As with every budget, there was also disappointment in some quarters. Here’s our quick take on this year’s budget:
7 (WELL, 8) HITS
1. Loans for homes
The Mortgage Corporation will give loans to Home Ownership Scheme (HOS) unit owners to pay the premiums in the event that they want to sell or lease their home. The government hopes the scheme can lead to a bigger supply of residential units as some owners find it hard to resell or let out their units because they don’t have the funds to pay the premiums.
2. Bumper surplus, again
John Tsang has gone and done it again: grossly underestimating the budget surplus. The surplus for 2014-15 will be HK$63.8 billion, more than six times the original estimate of HK$9.1 billion. But Tsang continues to warn that there will be a structural deficit within 10 years if government expenditure keeps growing at a faster pace than that of its revenue and the economy.
3. Lower taxes all round
Tsang has again reduced individual salaries tax and profits tax by 75 per cent, up to a cap of HK$20,000. Some 1.8 million taxpayers will benefit under the salaries tax cut and another 130,000 taxpayers will do so under the profits tax cut.
4. Heftier child allowances
Child allowances were raised for three consecutive years from 2011-12 to 2013-14. There was no adjustment in 2014-15 and now, it’s going up from HK$70,000 to HK$100,000.
5. Bigger lai see for the needy, elderly and disabled
Contrary to expectations, the government is dishing out not one month extra payment, but two months, to those on comprehensive social security allowance, old age living allowance and disability allowance. This unusually generous offer was only last seen in 2008-09 when the economy was hit by the global financial crisis.
6. Boost for creative industries
Finally answering the calls of many for Hong Kong to boost its creative sectors, the government is pouring HK$200 million into the Film Development Fund and introducing a subsidy scheme for films with a budget of less than HK$10 million. It is also launching a HK$300 million matching fund to support local arts groups. It will spend HK$500 million to promote Hong Kong’s fashion designers and brands, through improving local fashion events and participating in those held overseas.
7. Youngsters, go forth and be interns
The government is spending an extra HK$205 million in the next three years to support young people to take part in mainland exchange and internship programmes. The scheme is on top of an ongoing programme for university students to undertake internships in Asean countries. The first round saw 90 students taking up the offer.
8. Bonus 8th hit: food trucks, anyone?
The authorities are looking into introducing food trucks to the mix of Hong Kong’s existing food scene. But not ordinary run-of-the-mill meals, please. Quality lunches that are meant to encourage alfresco dining will be on the menu.
Watch: Occupy protests blamed as Hong Kong misses growth targets
1. Sparing smokers
Despite growing calls by anti-smoking groups, there was no further tax on tobacco. Last year, the government raised the tax on cigarettes by 20 cents per stick. It likely wants to watch the effect of last year’s increase before moving further, a source said earlier.
2. Property cooling measures not on the cards
The government is not about to burst any bubble or work on a soft landing on the property front, but pledges to monitor market conditions closely. It raised stamp duties last year to 15 per cent for most properties, raking in about HK$20 billion in revenue.
3. Mute on minorities
Despite calls by concerned groups, the government is not giving extra resources to the Labour Department to employ ethnic minority trainees. Ethnic unemployment is said to be higher than the city’s overall unemployment rate of 3.3 per cent, but specific data is not available.
4. No universal retirement protection
While not stating it outright, John Tsang implicitly ruled out a universal retirement protection scheme, saying pay-as-you-go retirement protection will eventually become unsustainable.
5. Too little for daycare for elderly and disabled
The government is dishing out HK$144 million to add more than 1,200 additional places for various residential care services and day training and vocational rehabilitation services for the disabled. These include children with special needs, resources for hostels for moderately mentally disabled people and long-stay care homes for the aged. Activists say there is an urgent need for more places, as waiting times can extend to more than 10 years.
6. No extras for dependants
There was no mention of an increase in tax allowance for dependent parents or dependent grandparents – even though with an ageing population, more working adults are supporting the elderly. Currently, the allowance for each dependent parent or grandparent is up to HK$40,000.
7. Not enough on the plate for catering
The sector claims it lost at least HK$3 billion in business during Occupy protests last year, and it has urged the government to set up a loan scheme to help instead of only waiving licence fees. Perhaps the government thinks food trucks are the answer? Watch this space.
7 THINGS THAT COULD AFFECT YOU IF YOU ARE ...
1. A salaried worker
You will get a 75 per cent cut in salaries tax, up to a cap of HK$20,000.
2. Married with children
Child allowances will rise from HK$70,000 to HK$100,000.
3. A property owner
Property rates will be waived for two quarters, up to HK$2,500 per quarter.
4. A businessman
You can get a piece of the HK$286 million pie of relief measures for businesses affected by Occupy. But wait, HK$106 million will go to the Tourism Board and Information Services Department to promote Hong Kong overseas, leaving HK$180 million.
5. An investor
You can look forward to an iBond issue of up to HK$10 billion with a maturity of three years. “The issuance will target Hong Kong residents, and interest will be paid to bond holders every six months at a rate linked to the inflation rates of the last half-year period,” Tsang said.
6. Homebuyer or property developer
Some 29 residential sites capable of providing 16,000 units will be put up for sale.
7. Looking for better health care
More money is being promised for health care, with expenditure estimated at HK$70.6 billion, accounting for roughly 16 per cent of the government total for 2015-16. And this year’s figure is 24 per cent higher than last year’s spending of HK$56.7 billion.