weekly
Written by: Huang Weixin
2021-01-25 14:45
Last update date: 2021-01-25 14:45
The new budget will be published at the end of next month. The Financial Secretary said on his blog that "some citizens" said that the government has a huge deficit this year and should raise the tax rate to increase revenue.
The outbreak of the new crown pneumonia epidemic has not ceased so far. The various anti-epidemic policies, including the job-guarantee program, have brought about a huge increase in government expenditure, and coupled with the need to deal with the downward pressure on the economy, is there no other way but to increase taxes?
A simple and low tax system is the cornerstone of Hong Kong’s economic success. It is not appropriate to make major moves to affect investor confidence. Some members of the public have proposed a sales tax, but now the public has little desire for consumption and the epidemic is raging. Unwanted cancellation of dine-in dinners in the evening market has greatly reduced the flow of people in shopping malls. This will make the retail industry worse, so it is not the right time to push sales tax.
If the government wants to increase taxes to set aside reserves to launch a new round of anti-epidemic funds, it can start with housing-related taxes.
The gathering restriction order requires restaurants to abolish dine-in food in the evening market, and the flow of people in shopping malls is greatly reduced. This will make the retail industry worse, so it is not the right time to push sales tax.
(Information Picture/Photographed by Lu Yiming)
The revenue from land sales in 2020 has dropped by 72% compared with 2019. The reasons include two commercial land bids and the failure of the blockbuster land to be sold in time.
Hong Kong’s main tax revenue comes from land sales. While the property market has not yet seen a significant correction, the government should put more land on the market in order to increase treasury revenue as soon as possible.
At present, the property market is stalemate, and second-hand property transactions have not improved. It is precisely because of the hot tricks (extra stamp duty, double stamp duty, buyer stamp duty) that the transaction cost of owners has increased. The cost, I would rather wait and see; the spicy tax also increases the cost of purchasing a second property. If the spicy tax is removed, the second-hand market can be activated.
After the Sala, the government can increase the rates, land rent and transaction costs of the second property, replacing the three major taxes as measures to prevent overheating of the property market; the abolition of the spicy tax will promote an increase in transactions, and the land rent and rates are both long-term income. Treasury brings more benefits.
Hong Kong’s main tax revenue comes from land sales. While the property market has not yet seen a significant correction, the government should put more land on the market in order to increase treasury revenue as soon as possible.
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On the other hand, the Housing Authority’s information shows that the average waiting time for public housing is 5.4 years, and the housing ladder has already broken. People who originally had incomes suitable for subsidized housing are forced to switch to renting in the private housing market. Covering your head, even if you barely get in the car, you have to borrow the first installment from your relatives and friends, pushing up the demand for private buildings.
Therefore, after the above three measures have improved government revenue, after the epidemic is over and Hong Kong has overcome the difficulties, the government should imitate the Shared Ownership Households plan of the City of London in the United Kingdom to allow eligible first home buyers to purchase the lowest mortgage Two-and-a-half percent of the ownership is held by the House Association established by the British government. Buyers pay rent to the association in proportion to the ownership. In the future, they can increase their ownership in stages and become owners step by step.
"Being determined to stay in this boat, we will make it undamaged." I hope that next month's budget will consider the above suggestions so that the Hong Kong government can cope with the storms and relieve the shortage of public and private housing.
In the future, the Hong Kong government should also start with more supply, including simplifying and speeding up land premiums for conversion of land to residential use, rezoning approvals, and launching more financial support plans to assist home buyers of different classes to allow the people to live and work in peace.
Budget, Financial Secretary, Property Market Stamp Duty