Hong Kong’s 2012/13 budget
Yesterday, John Tsang, Hong Kong’s financial secretary, delivered his highly anticipated budget for 2012/13 (Hong Kong’s tax year ends at March 31). In “normal” countries you’d expect the government to announce to make another few billion of debt. But Hong Kong is not normal. The most capitalist city on earth doesn’t believe in making debts and hardly taxes its citizen. Despite that, Hong Kong regularly has a budget surplus and doesn’t know what to do with it….
Last year, they used the surplus to pay every Hong Kong citizen HKD 6,000 (USD 775). This was widely criticized as fueling inflation and giving money away that could’ve been used to alleviate one of Hong Kong’s many ills such as bad air, shortage of residential units, increasing wealth gap, etc.
Now, the government seems to have become smarter. Or have they?
Part of the money handout includes raising the tax free allowance, a tax rebate of HKD 12,000 per person and an increase in electricity subsidies of now up to HKD 1,800 (USD 232) per household per year.
Well, that’s a nice handout for the upper middle class who pays taxes (like myself). But for the 70% of Hong Kong residents that do not pay taxes (because their income is so low, it’s below the tax free allowance) lower taxes and a tax-free allowance don’t help much.
There’s the electricity subsidy which will benefit every household in Hong Kong. But this subsidy will have an overall negative effect. When the subsidy was originally introduced energy consumption in the city shot up by a few percent. And electricity is badly needed. Without an air conditioning it’s almost impossible to survive the brutal summers here. But instead of giving out subsidies that encourage more energy consumption how about providing subsidies that give an incentive to save energy?
It always surprises me that, despite being a rich city, Hong Kong doesn’t do much in energy conversation. Even Mainland China is more advanced. Double glassing in houses, to increase isolation, is something almost unheard of here. Even luxury development use single glass. In every flat I lived in Mainland China though I had double glasses. Same holds true for electronic appliances. Most of the stuff sold in the shops in Hong Kong has the worst energy rating. Mainland China is more advanced in that regard.
Hong Kong’s surpluses could’ve been used to increase the length of free education or to provide more social housing, which is badly needed. Alas, the recent budget just shows that the city’s top bras are administrators – but no leaders.
They don’t seem to have any vision at all.