17 February 2008

Imagine you discovered you had a massive sum of money in your bank account that you didn't realise you had. A huge sum. Enough money, in fact, to pay for pretty much anything you wanted.

What would you do with it?

If you were a reckless person, you might go out and blow it in one massive spree, treating yourself to every imaginable luxury and ending up with a store of exhilarating memories but an empty bank account.

If you were an overly cautious person, you might leave it sitting in the bank, refusing to acknowledge your unexpected wealth, reluctant to spend so much as a dollar and convinced it must be left intact for a rainy day that might never come.

Most of us, of course, would be neither reckless nor overly cautious. Most of us would be sensible. We would enjoy some of our windfall, share some of our good fortune with others but keep enough carefully saved and invested to ensure our continuing prosperity.
For the majority of hard-working Hong Kong people, the dilemma I have just outlined may seem like an impossible dream - a scenario as unrealistic as wondering how to spend the proceeds of a winning Mark 6 lottery ticket. In Hong Kong, however, it is our collective reality. Our Financial Secretary is currently deciding what to do with a budget surplus that two months ago we expected to be 50 to 60 billion dollars but which now looks like being more than 100 billion dollars - the largest surplus in any financial year this territory has ever sat upon.

As the public presentation of the budget draws near, too many references have been made to the government's surplus. It is crucial to remember that this isn't the government's surplus, and it isn't the government's money. It is Hong Kong people's surplus, and it is Hong Kong people's money.

We have a right to ask for it to be used in a way that is neither reckless nor overly cautious. We have a right to ask for it to be used sensibly. It is our money, after all.

That is why we in the Liberal Party are calling on the government to use some of this massive budget surplus to return wealth to the people - to lessen the burden on businesses, the middle class, and to help the poor and the elderly.

We understand the government's cautiousness. Harder economic times may lie ahead as the US economy heads towards what many believe may be a prolonged recession caused by the sub-prime crisis that will impact upon us all. However, the way to deal with a downturn is not to empty people's pockets and fill them with pessimism. The way to deal with a downturn is to give people a sensible and manageable increase in spending power and fill them with optimism.

We would not in any case ask the government to sign blank cheques that it has the funds to meet only this year and not in future years. That is why we are proposing a one-off rebate of at least 50 per cent of last year ' s salaries tax, up to $20,000 and waiving property rates for one year at a level of up to $5,000 per household - a step that will put money into people ' s pockets and benefit our economy as a whole.

We also believe, however, that it would be overly-cautious of the government not to use this opportunity to reduce the general levels of salaries tax and profits tax. The standard tax rate should be cut by one per cent from 16 to 15 per cent, taking it back to their 2002-2003 level, and tax bands and marginal tax rates revised to ease the burden on the middle classes.

Profits tax should meanwhile be cut from 17.5 per cent to 15 per cent, a goal that our chief executive Donald Tsang has promised to strive for in his election campaign last year. There is a global trend for reducing profits tax to enhance competitiveness. Singapore has lowered its rate to 18 per cent and we should cut ours further to maintain our competitive edge over our regional rival.

We also have a responsibility to make sure that our prosperity is not a selective prosperity but a common prosperity. The measure of a civilized society is the way it looks after its weakest members.

We believe the levels of social security allowances for the elderly over 65 should be increased to $1,000, a move that will cost us an extra $1.7 billion a year, but improve immeasurably the quality of life for our senior citizens by taking some of the stress and worry out of paying their monthly bills in these days of high inflation.

Health care is critical to the elderly. The government has put forward a proposal to give five health care vouchers worth a total of $250 to each elderly person per year. The idea is a good one, but it is not enough. We would like to see each elderly person given $1,000 worth of health care coupons a year, a move that will cost the Government an extra $500 million a year.

We would like to see the levy on the hire of foreign domestic helpers abolished immediately and the accumulated levy, roughly $4 billion, used swiftly and constructively to re-train our local workers as promised by our government.

We would like to see air passenger departure tax reduced to $50 to offset the impact of rising fuel prices on flights. We would like to see tax on red wine abolished altogether and the resultant concessions passed fairly on to consumers and tourists by shops and supermarkets.

Our proposals are measured and reasonable. We have a substantial surplus and we have a responsibility to use it constructively and positively in a way that will benefit our community and boost our economy.

We calculate, on the basis of estimated $100 billion surplus, that our one-off measures such as the rebate in salaries tax and the waiving of rates will cost us $18 billion. Other recurrent ones such as reducing taxes and helping the elderly will cost a further $24 billion a year. That will leave us with a further $50 to $60 billion to be put into the Reserve.

Like most of the people who have played a part in the extraordinary success story of our extraordinary city, the Liberal Party is neither reckless nor over-cautious. We have done our sums, we can see the possibilities, and we want to see a budget that saves prudently for an uncertain future, puts our surplus to work, but, at the same time, returns wealth to the people who created it.

And, importantly, we need a benevolent government who is willing to do so.