Budget | Only talk about recovery, not distribution?

The new "Budget" was released on February 22. As expected, in response to the epidemic that hit Hong Kong's economy hard, treasury revenue did not meet expectations, and the budget deficit exceeded 100 billion. The government decided to "reduce sugar."

The consumption vouchers for rain and dew have been halved, the tax relief for the middle class has been greatly "shrunk", and the support for the grassroots citizens who have been hit hard by the epidemic is only a one-time living allowance and electricity subsidy as targeted measures.

Grassroots citizens complained endlessly, but the entire "Budget" did not mention "targeted poverty alleviation" at all, and there was no detailed mid-to-long-term poverty alleviation plan.

In the end, what is the current logic and means of wealth distribution by the government?

Chen Maobo read the "Financial Budget". As expected by the outside world, the government has reduced sugar in response to the epidemic's severe damage to the Hong Kong economy and a budget deficit of over 100 billion yuan.

(Photo by Lu Yiming)

Is "small government" a thing of the past?

"Strive for the economy, move towards high-quality development, and improve the quality of life of citizens." The budget starts straight to the point, stating that the government should aim to increase income through economic development, in order to resist the economic recession caused by the epidemic and promote social and economic recovery.

The epidemic that has lasted for three years has forced the government to invest a lot of resources to fight the epidemic. At the same time, tax revenue has been reduced and land sales revenue has been greatly reduced. The government budget for 2022/23 has a fiscal deficit of 139.8 billion yuan, and fiscal reserves have fallen to 817.3 billion yuan, which is equivalent to the government's 12 months of expenses.

Financial Secretary Paul Chan declared that more than 80% of the deficit budget he formulated was spent on citizens and small and medium-sized enterprises, hoping to take care of citizens in need as much as possible and strengthen the momentum of economic recovery.

Li Junrong, a lecturer in the Division of Social Sciences, Humanities and Design, Faculty of Professional and Continuing Education, PolyU, wrote an article in Ming Pao, comparing the 2004 Budget, which also promoted post-epidemic recovery, and pointed out that Tang Yingnian, then Financial Secretary, focused on "Cut expenditure first, then increase income"-reduce the official establishment, promise to control the proportion of public expenditure in GDP at or below 20%; explore new privatization plans, study the introduction of sales tax-to deal with the economic depression.

In this year's budget, the Financial Secretary, Paul Chan Mo-po, clearly stated that "cutting expenditure is a must, and increasing revenue is more important." Instead of proposing measures to save recurrent expenditure, he handed over a "deficit budget".

This change confirms that "small government" is a thing of the past.

Financial Secretary Henry Tang, in his first budget after SARS in 2004, proposed to "reduce expenditure first and increase revenue later".

(Reuters)

Carrying a fiscal deficit of 140 billion yuan, Chen Maobo instead continued the expansionary fiscal policy during the epidemic, insisted on distributing sugar under "doing what he can", and devoted a lot of resources to the development of industries such as innovation and technology, and promoted Hong Kong to move towards the "14th Five-Year Plan" "The positioning of the eight centers - international financial center, international innovation and technology center, Chinese and foreign culture and art exchange center, international trade center, international shipping center, international aviation hub, international legal and dispute resolution service center in the Asia-Pacific region, and regional intellectual property trade center .

Even if the budget "receives less oil and less sweetness" - the previous year's 10,000 yuan consumer vouchers have been halved; the one-off allowances such as salaries tax and personal assessment tax reductions have been reduced from 10,000 yuan to 6,000 yuan, and the rate concessions have only been reduced. In the remaining two quarters, the upper limit of 1,000 yuan, CSSA and elderly living allowances will be paid for more than half a month, but the government understands that at the beginning of the recovery of the epidemic, many grassroots citizens and small and medium-sized enterprises need support to get out of the predicament.

This financial view is undoubtedly worthy of affirmation.

In the budget, "Receive more oil and less sweetness", the previous year's 10,000 yuan consumer coupons were halved; the upper limit of one-time allowances such as salaries tax and personal assessment tax reduction was reduced from 10,000 yuan to 6,000 yuan, and the rate reduction was only two Seasonal upper limit of 1,000 yuan.

(Photo by Lu Yiming)

Still a trickle-down effect

However, the government's financial allocation is still limited to one-time subsidies and tax rebates, without mentioning "targeted poverty alleviation", and lacks a medium- and long-term poverty alleviation plan. The slogan "high-quality development, improving the quality of life of citizens" implies The old tune of "trickle-down effect".

It is undeniable that Chen Maobo invested a lot of resources in the development of a diversified economy, trying to get rid of the chronic problem of single industry. If the emerging industries are booming, the ladder of upward mobility may reappear.

The problem is that when the "pie" in the market grows bigger, the tools to "collect" and "distribute" the pie to the grassroots are still insufficient - the tax base and tax types exclude the newly established progressive rate system, the increased tobacco tax and the five-year In addition to the 12 billion additional gaming tax, it still relies heavily on land-related income, salaries tax, profits tax and extremely low stock stamp duty; the distribution tools are only regular cash items, including CSSA, elderly living allowance, disability allowance, etc., and The "non-recurring cash items" (commonly known as "candy") that are distributed once a year in the budget include one-time cash subsidies, tax relief, consumer coupons, etc.

As we all know, rates and tax concessions have limited help to the grassroots.

According to the 2021/22 annual report of the Inland Revenue Department, there are more than 1.8 million taxpayers in Hong Kong, and about 51% of them have an annual income of 132,000 to 400,000 yuan (monthly income of 11,000 to 33,000 yuan). Their annual salary tax average is 35 It is impossible to enjoy the tax relief of 6,000 yuan and the 10,000 yuan relief amount in 2022 and 2021.

Rate relief can only benefit the "ownership class".

According to government information, as of March 31, 2020, among the number of people who own properties wholly, jointly or separately in the name of individuals in 2019/20, a total of 1.65 million people in Hong Kong own one property, and 455,000 people own more than one property property.

If calculated based on the approximately 7.47 million people in Hong Kong, 70% of them do not own properties, and only 30% of them can benefit.

According to a report by the Legislative Council Secretariat, between 2007 and 2017, the authorities launched a total of 320 billion yuan in "one-off relief measures", of which 64% was obtained by taxpayers, but only 16% was directed at the grassroots.

This clearly favors the middle class and the rich, and violates distributive justice.

Last year, the number of poor people in Hong Kong reached 1.653 million, and the poverty rate reached 23.6%, an increase of 162,000 from the previous year and a new high since the record was kept in 2009.

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The government needs to do a good job in "secondary distribution". According to the principle of taking into account fairness and efficiency and emphasizing fairness, distribute property through taxation and social security expenditures, realize "the able-bodied pay more", reduce the burden on citizens, and improve the quality of life.

Faced with the 1.653 million poor people before the policy intervention in the "2020 Hong Kong Poverty Situation Report", the government must achieve "targeted poverty alleviation", redefine the poor population, and think about appropriate poverty alleviation methods, only using "regular cash items", " Measures such as "non-recurrent cash items" and non-cash welfare programs such as public housing, kindergarten and child care center tuition fee reduction schemes only help grassroots citizens just cross the poverty line, and their lives are still not far from poverty.

However, this year's budget does not mention "targeted poverty alleviation" throughout, and it lacks medium-term and short-term poverty alleviation plans. In the end, the way for grassroots citizens to benefit from economic and industrial development is to wait for the "cake" to be relieved from the fingers of the rich. Slowly drip.

As a matter of urgency, the government should increase systematic distribution tools, including broadening the tax base based on the principle of tax justice, such as setting up direct taxes such as stock asset appreciation tax, inheritance tax, and social insurance premiums, and at the same time setting up a minimum living wage—a basic cost of living Above all, provide a certain amount of money for emergencies and savings, and establish universal retirement protection, so that citizens who have worked hard all their lives can enjoy their old age with dignity, instead of still running around in their twilight years and struggling to survive in poverty.