Interesting points about Hong Kong’s Financial Budget 2012-2013

The 2012-2013 Hong Kong financial budget was announced on Feb 1. A series of functions have been held on HKU campus to discuss this. Last year, the Hong Kong government distributed a HKD 6,000 free money to all permanent citizens and stirred up fierce debates. This year, some citizens naturally hope the government to distribute more money to relieve their pressure. Instead of giving out money, the government plans to increase expenditure in education, public housing,  infrastructure, and medicare, at the same time reducing taxes.

Tonight’s forum is basically about different parties justifying their perspectives. Their arguments reflect the classes they represent. However, there are some points worth noticing:

1. It is widely criticized that the new budget benefits mainly the middle class (tax credits, public housing, education, etc) and fails to address the need of the ultra poor. The housing system doesn’t provide enough assistance to the extremely poor. Education wise, the rising costs of tutoring makes it unlikely for kids from a poor family to get admitted to a good school, and therefore potentially enhances the vicious circle of generational poverty.

2. The Hong Kong government seems to be stocking up too big a share of GDP. Last year’s distribution program applies to all citizens including overseas Hong Kong people who haven’t been back for years. It is more like a relief against rising costs of living than an effective redistribution of wealth.

3. Monopoly and the boundary of government’s intervention (which interests me the most). Mr. Tien, a famous businessman in Hong Kong, said on tonight’s forum that a free economy means that the strong become stronger and the weak become weaker. Hong Kong has long advocated “small government, big market”, but has recently been criticized for enhancing the monopoly of property market. To what extent and in what way should the government intervene in the economy?

4. The retirement scheme. It has been mentioned in several parties’ proposals and is relevant to the aging population in Hong Kong. But this will be a major policy change and will have long-term impacts on savings, investments, and future living standards as well.

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4 thoughts on “Interesting points about Hong Kong’s Financial Budget 2012-2013

    • I’m suggesting a progressive tax scheme instead of a tax reduction. The tax system now in HK is flat. But it should tax the rich more and tax the poor less. Actually, the basic law says that HK should maintain a relatively simple tax system. So every financial executive uses this as an excuse for not reforming the tax system.

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