Date
24 May 2017
The fresh-off-the-press budget could have found more creative ways to help those most affected by the sluggish economy. Photo: HKEJ
The fresh-off-the-press budget could have found more creative ways to help those most affected by the sluggish economy. Photo: HKEJ

What to do with the big fiscal surplus?

Hong Kong now has a cumulative HK$860 billion in fiscal surplus.

Given such a big number, the 2016/17 budget has taken into consideration comprehensive and forward-looking factors to prepare the city for the future.

The budget has both short-term and long-term measures to help those most affected by the sluggish economy and explores policies to encourage innovation and business development.

However, the budget could have taken more specific and creative measures.

Yes, measures like exemption of tax or waiving of license fees can relieve the economic pressure on many residents, but it should also have launched more specific policies — for instance, giving tax incentives to married couples where both spouses have full-time jobs.

Moreover, it could also have strengthened support for residents faced with the problem of unaffordable housing.

Although the government plans to increase land supply, and home prices have declined recently, we still think Hongkongers suffer from a housing problem, given high rents and home prices.

As the government has reiterated it has no intention to lift the restrictions on home purchases, it might consider including rent as part of the allowances that can be deducted from the base income for salaries tax, or offer a refund of stamp duty when a homebuyer lives in the flat he or she has bought.

It was correct for the budget to emphasize innovation.

I hope the authorities can simplify the application and processing procedures for the funds earmarked for innovative firms and create incentive tax arrangements — for instance, giving newly established high-tech companies a 10 percent discount from profits tax for five years.

Another way to strengthen Hong Kong’s competitiveness is for the government to offer profits tax discounts to attract investment by foreign companies.

In addition, the authorities could promote the “Made in Hong Kong” brand to encourage Hong Kong entrepreneurs and their factories to return to the city.

Leung Ting-yan, a senior manager at Deloitte China, is a co-writer of this article, which appeared in the Hong Kong Economic Journal on Feb. 29.

Translation by Myssie You

[Chinese version 中文版]

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