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Written by: Hao Yang Yang
2020-03-07 16:57
Last updated: 2020-03-07 16:58After the Budget was announced at the end of last month, public opinion had little objection to the government's nationwide distribution of money, even though this spending caused the government's deficit to soar to 139.1 billion yuan in the 2020/21 fiscal year. It is worth noting that, in the last paragraph of the Budget, the Financial Secretary, Chen Maobo, laid a foreshadowing that may reduce public expenditure in the next few years. Looking back at the budget logic of reducing government spending after SARS in 2003, the livelihood challenge may have just begun. In retrospect, when we were financially healthy, we did not do a good job in public financial reform. The economic recession caused by the anti-revision storm and the new coronavirus pneumonia epidemic became a perfect excuse for one-off measures. It seems that even if we are lucky enough to survive the economic downturn, Hong Kong will continue to wander through the fog of conservative fiscal policy.
In the Budget announced on February 26, each Hong Kong permanent resident over the age of eighteen was paid $ 10,000 in cash. (Photo / Photo by Zhang Haowei)
In the budget announced on February 26, the SAR government responded to private demands and distributed RMB 10,000 in cash to each Hong Kong permanent resident over the age of eighteen. There was no asset review, and the total expenditure was about 71 billion yuan. This large expenditure, coupled with tax rebates and "paid sugar", has caused the government's fiscal deficit to increase to 139.1 billion yuan in 2020/21, equivalent to 4.8% of GDP. The government expects a deficit to continue for at least the next five years. In the operating accounts, the operating account deficit for the four financial years starting from 2021/22 was about 50 billion yuan per year. The overall consolidated account deficit is between $ 7.4 billion and $ 17 billion. The above forecasts do not take into account possible tax rebates and relief measures introduced by the government.
The government's operating account refers to taxation and various fees and rates income, plus non-operating income such as land sales and other fund rebates, which is the overall consolidated account. The government pointed out that the deficit mainly came from increased recurrent expenditure in recent years, from 149.4 billion yuan after the reunification to 488.6 billion yuan in 2020/21, and stated that "such rapid growth cannot be sustained." What's more noteworthy is that the Budget states that "In the future, government expenditure will enter a consolidation period ... As for increasing efforts in the future, we must pay more attention to the government's long-term fiscal capacity and adapt to the increase in income. "In addition, we need to consider exploring new sources of income or adjusting tax rates, and the size of one-off relief measures may need to be gradually reduced."
The government's operating account refers to taxation and various fees and rates income, plus non-operating income such as land sales and other fund rebates, which is the overall consolidated account. (Photo / Photo by Liang Pengwei)
Deceptive history reduces prelude to public beginning
Demonstrations that seem to be familiar can be seen around SARS in 2003. If we look at the 2002/03 budget first, Hong Kong's economy began to contract in 2001, with a real economic growth of only 0.1%, and the comprehensive deficit in 2001/02 was 65.6 billion yuan. The 2002/03 Budget states that public expenditure will rise to 22% in 2001/02. This is because Hong Kong has faced economic adversity since 1998. "The government has deliberately adopted anti-economic cycle fiscal policies in consideration of the needs of the community. Expenditure growth is higher than economic trends in the short term. " And in order to avoid public spending "occupying too much social resources and hindering the development of the private market", the government set a target that year: in 2006/2007, control public expenditure to 20% or less of the economy, and restore the balance of income and expenditure in the comprehensive account.
To achieve this goal, the government ’s approach is to reduce public expenditure, such as “downsizing” the civil service team, launching a “voluntary retirement plan”, freezing the recruitment of civil servants, replacing civil servant positions with outsourcing, and requiring civil servants to take pay cuts, etc .; another important means It is a privatization, such as the sale of part of the shares of the MTR Corporation Limited. Almost two decades later, these bitter fruits, I believe Hong Kong people have their own suffering. What needs to be pointed out is that the problem is not the "balance of payments" itself, but by what means to achieve this effect? Whose interest was sacrificed?
Reducing public expenditure means, for example, "downsizing" the civil service team, launching a "voluntary retirement plan", freezing the recruitment of civil servants, replacing civil servant positions with outsourcing, and requiring civil servants to reduce their pay. (Profile picture)
Let's take a look at the measures put forward by the government to increase revenue in 2001/02. Tobacco taxes, alcohol taxes, driver's license fees and vehicle license fees, roadside parking meters, and passenger departure taxes were raised in 2001/02. The total revenue increase was 6.6. A total of RMB 400 million was raised in 2002/03 by raising the wine tax and reducing the local residents ’tobacco and alcohol allowances. In the 2003/04 budget, in the face of Hong Kong ’s historically largest deficit of 70 billion yuan in 2002/03, the government proposed to raise salaries tax and profits tax, which increased a total of 10.3 billion yuan in revenue, but it was accompanied by a reduction in social security assistance11 %, Reducing 1.71 billion yuan in expenses. The subsequent 2004/05 budget began to consult on the cancellation of the inheritance tax, which was implemented in early February 2006. It must be known that the inheritance tax provided the government with 1.3 billion to 1.9 billion yuan in revenue in the past.
All the above shows that the so-called tax and fiscal policies of the Hong Kong government, apart from hiding behind "big markets and small governments", do not have a set of governance philosophy. When there is money, they engage in tax rebates, rates, etc. "When you have no money, you will be told to increase taxes. At the same time, public expenditure will be cut, but" capital "will be specially discounted.
When the Hong Kong government is rich, it does not carry out fiscal reforms. When it does not have any money, it increases its expenditures briefly. Then, when there is a fiscal deficit, it operates on the public. (Photo / Photo by Liang Pengwei)
A prelude to the history of seemingly acquaintances
When the Hong Kong government is rich, it does not carry out fiscal reforms. When it does not have any money, it increases its expenditures briefly. Then, when there is a fiscal deficit, it operates on the public. In the 2006/07 budget, while reducing the marginal tax rate of salaries tax, the government proposed to study the introduction of regressive goods and services tax, which not only increased the burden on the middle and lower classes, but also hinted that it could provide a reduction in profits tax and reduce the original corporate tax Should bear more tax liabilities passed on to the middle and lower abbreviations. Therefore, for the Hong Kong government, it is not a question of whether to increase, decrease, or reduce taxes, but how to increase or decrease. It always takes corporate capital as the most important factor, and the interests of the citizens are only for the benefit of serving the enterprise.
Back to today's 2020/21 budget, society must be alert that the 10,000 yuan sent by the government is at any time a foreshadowing to reduce its responsibility for distributing benefits in the next few years. However, it must not be ignored that financial reform is its due meaning. When society discusses, it is necessary to hold firmly to a basic judgment of social reality, that is, the growth of society ’s economy depends on the joint efforts of citizens of all strata. At the same time, the phenomenon of social inequality has gradually intensified, leaving the ideal state of a fair and just society.
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