MR CHAN KIN-POR (in Cantonese): Chairman, the amendment proposed by the Government this time around is to raise the one-off reductions of salaries tax, tax under personal assessment and profits tax for the year of assessment 2018-2019 from the original 75% to 100%, while the ceiling of $20,000 per case is unchanged. This is also a measure proposed by the Financial Secretary in August to relieve the hardships of the people, which will benefit 1.43 million taxpayers or tax-paying corporations and help them save $1.84 billion of taxes. Of course I support the Government’s proposal as Hong Kong is in the midst of chaos and many small and medium enterprises (“SMEs”) are facing a difficult time. However, I wish to point out that the proposal is rather trivial as it will benefit a small group of people only. Besides, if the Government really wants to benefit the middle-class and grass-roots people, it should introduce tax reform in a bold and decisive manner.
As a matter of fact, raising the tax reduction from 75% to 100% without increasing the $20,000 ceiling will bring a rather limited benefit to taxpayers who have to pay salaries tax. A number of Members have also pointed out that basically, for taxpayers who are earning $400,000 per annum, the 75% in tax reduction will enable them to save the maximum $20,000 in tax if they are not entitled to other tax allowance. That is to say, it is meaningless to them even if the rate of reduction is increased to 100%. If a taxpayer who is earning $500,000 per year and is entitled to child or dependant parent allowance, he or she can also enjoy the maximum $20,000 concession. Therefore, even if the rate of reduction is raised to 100%, it will not bring much benefit to the public. The middle-class people will not enjoy much help from the measure. On the other hand, the amounts of tax payable by many low-income people are below $20,000, therefore a 100% reduction will not do them any good at all.
Regarding this amendment, many Members have pointed out that the concession is too little and inadequate to relieve the hardships of the people. As a matter of fact, some Members have also put forward other proposals, and I have seen that a lot of pro-establishment Members have actively taken part in today’s debate, with a view to putting forward their suggestions to the Government and do something which can really help the people. For that reason, I consider that the Government should study these suggestions by the Members in a determined manner. I concur with some of the suggestions. First, the concession amount should be increased from $20,000 to $30,000 or higher, so as to benefit the middle-class as well as owners of SMEs. But of course the Government has to allocate more resources. In fact, last year the Government also proposed a concession subject to a ceiling of $30,000 per case. For that reason, will the Government do the calculation again and see if the ceiling can be raised to that level? Secondly, as pointed out by some Members, should the amount of tax saved by a taxpayer be less than the maximum $20,000, can the difference be carried forward to the next fiscal year? They are of the opinion that since the Government has made provision for this amount of money, then it should be more generous and allow the taxpayers to make use of the difference concerned in the next fiscal year. Just like the health care vouchers, and elderly people are allowed to carry forward and accumulate unspent vouchers. This suggestion will benefit grass-roots people more. The Government should study if it is feasible.
Chairman, as I have said during the Second Reading debate, the Government should reform Hong Kong’s tax regime in a bolder and more decisive manner with a new way of thinking. I have once proposed that for a person earning less than $600,000 per annum―that is, a middle-class person with a monthly salary of $50,000 or below―should be exempted from salaries tax. Certainly, I do not have the resources to conduct a detailed study, but my proposal is just to “cast a brick to attract jade”, in the hope that the Government will be encouraged to implement policies with a new way of thinking. We can see from Inland Revenue Department’s figures that in the fiscal year 2016-2017, there were 1.35 million people earning less than $600,000 per annum, which accounted for 76% of the total number of salaries tax payers. Nevertheless, the amount of tax they paid only accounted for 8.6% of the total amount of salaries tax. That is to say, if people earning less than $600,000 per annum are exempted from salaries tax, the Government will only forego 8.6% of the salaries tax, but the effect is that 76% of the public can get out of the tax net. Just think about it, many people would be pleased by such a benevolent policy.
In fact, each year the Government will introduce tax concession measures, even though people earning over $1 million per annum can also enjoy the $20,000 concession. For the more than 100 000 people whose annual income exceeds $1 million, will the Government consider―first, of course I consider that they should enjoy the $20,000 concession because they have paid the majority portion of tax, but should the Government also consider other measures? A fairer approach is for those whose annual income exceeds $1 million or $2 million to be subject to a higher tax rate? That is, instead of 15%, it should be 15.5% or 16%. In so doing, the foregone revenue could be recovered quickly. In my opinion, as far as this high-income group are concerned, they would not mind the increase. Nevertheless, I should not speak on their behalf; I can only express my own personal view. However, I believe that many people are of the opinion that if our society can adopt this revamped tax arrangement, more people will benefit and the number of poor people can be reduced. Actually it will improve the atmosphere in society, and it can also minimize the chance for some people to distort the argument or to incite confrontations among people. For that reason, just think about it, if we can achieve something good, then we should do it. Let me cite an example, if we do not allow people earning more than $1 million per annum to enjoy the $20,000 concession, the Government can save up to $3 billion. That is, if the Government exempts those earning less than $600,000 per annum from salaries tax, actually the Government’s expenditure will increase by $1 billion at the most. Therefore, there are millions of solutions. The question is whether or not the Government has the determination and courage to make the decision, if they could get rid of the bad habits such as the culture of “doing less means erring less”, or if they can avoid procrastination on everything and avoid doing things with their own hands. If so, the Government can achieve a lot of tasks.
Alright, I have also heard some opposing arguments against such measures, citing such reasons as administrative difficulties, and even strong resistance. Some Secretaries tell me that when they propose some innovative measures, some bureaucrats will raise objection on grounds of administrative difficulties. As a result, the entire Government will continue to stick to the same old rut. I very much hope that these bureaucrats will seriously reflect on the culture of “doing less means erring less”. In fact, one can see from the social unrest this time around that why the people are enraged as a result of the accumulation of grievances. In simple terms, if the chaos continues, some officials may have to step down sooner or later. I also think that some of these incapable officials or those who are widely known for their underperformance and reluctance to do things should be removed from office. I really think that these officials will no longer be accepted in today’s Hong Kong. Nowadays, incapable officials should leave their seats. For that reason, I hope that the Chief Executive will take a good look at her team of officials and see if some underperforming officials should leave. If this culture is not changed, Hong Kong will only be “dried up” and Hong Kong will have no future; everyone will regret that. Moreover, some people say that the measures are infeasible as they will narrow the tax base. Nevertheless, according to the figures concerned, only 8.6% of the revenue will be foregone as I mentioned before, and the impact is quite minimal. Besides, I think that Hong Kong people have a sense of honour and justice, if the Government is willing to introduce the measures, I think they will be willing to pay salaries tax again if so requested in case of a future economic downturn. As a matter of fact, the Government does not have the need to amend the relevant law, so it can request these people to pay salaries tax anytime it considers necessary. The current measures are only temporary ones to exempt them from salaries tax. I think that Hong Kong people are willing to share weal and woe and have a sense of responsibility. Therefore we should not worry about it.
As a matter of fact, the Financial Secretary set up the Working Group on Long-Term Fiscal Planning in 2013 to study how the Government should plan for the ageing population and its long-term financial undertaking. Furthermore, the Financial Secretary decided that the Tax Policy Unit, which was set up in 2017, would be headed by himself. Everyone knows that the Financial Secretary is a tax expert, and I appreciate his farsightedness for taking charge of the tax reform task since he knows the root problems. I hope that he can come up with a solution to the impact of ageing population on Hong Kong’s public finance, so that we can have a bright future.
I believe that the Government should accord priority to economic development in its reform, for example, to promote economic and industry development through taxation policy. As I always say, we should make use of tax concessions to promote the development of headquarters economy and attract global enterprises to set up regional headquarters in Hong Kong, with a view to giving the impetus to the comprehensive economic development as well as creating quality job opportunities. I believe that if we are to restore Hong Kong’s competitive edge, the real solution is to create wealth for our society. I believe that this will be more effective than increasing the reduction rate from 75% to 100% with a ceiling of $20,000.
My office has received a lot of enquires from the public about the time for the introduction of Government’s relief measures, and they indicate that they have been waiting anxiously. What we are debating today, the Inland Revenue (Amendment) (Tax Concessions) Ordinance 2019, is one of these relief measures. More measures await the scrutiny of the Finance Committee, such as the measures to subsidize electricity tariff, rents of public rental housing, payments of the Comprehensive Social Security Assistance and so on. Each day I receive phone calls and letters from the public and they all wish that the measures can be approved by the Finance Committee as early as possible. I believe that the people’s aspiration is very clear, and I very much hope that the Government can speed up the process in order to deliver the resources for relieving the hardships of the people to them as soon as practicable.
I have always heard a remark by the opposition camp―today some Members have made the same remark―that we are duty-bound to monitor the Government. I agree with it. Therefore, I will cooperate with them by increasing the meeting time of the Finance Committee significantly, so as to complement their duties to monitor the Government. I will consult them about increasing meeting time and I hope they will translate their words into deeds and they will be willing to spend time monitoring the Government. Instead of sticking to their past practice by selecting the checkbox of “unable to present” in the reply slip, hence not many of them or only a few of them show up in the meeting. I really hope that they will all participate in the meeting so that we can convene the meeting as soon as possible. I really want to convene meetings of the Finance Committee. It is okay for me to convene meeting on a daily basis. But if no Members are going to attend, how can I convene meetings?
For that reason, we should not indulge in empty talk; we should take action to show our support. Unfortunately, I cannot make public the statistics of Members’ replies. Otherwise, I am more than happy to tell the truth to the public. I hereby urge the opposition camp―I do not know the reason, but they are not in the Chamber at this moment―to put their words into action; they should not think one way and act another. They should show people that they can put words into action. As far as monitoring the Government is concerned, we should spend more time holding meetings of the Finance Committee for detailed scrutiny of funding proposals. In so doing, we can speed up the scrutiny progress and hence it will meet what you have been advocating. It would be bad if your words and deeds do not tally. For that reason, I will try my best to cooperate with Members by increasing the meetings of the Finance Committee. It is quite unbelievable that many people have called and asked me when the civil servants will have their pay rise, when the funds will be allocated? I hope that we will expeditiously respond to the needs of the public.
Lastly, I have to point out that in my opinion, apart from the need to stop violence and curb disorder as soon as possible, it is the time for reconciliation, for us to do something practical and realistic. Therefore, no empty talk, we should put words into action. I think that no matter how many relief measures are introduced, their effects are quite limited. It is because public resources will be used up very soon. The Government also indicates that Hong Kong will enter a technical recession very soon. It is estimated that the wave of unemployment and closures will bring more trouble to Hong Kong’s economy and make people’s livelihood more difficult.
Many people say that the market is worse than it was during the SARS outbreak, I agree with that. However, there was no black terror during the SARS outbreak. That is, even if you say something unpleasant to the ears of other people, they will not beat you up for what you have said; or you do not need to find out which district is safe if you want to go out. During the SARS outbreak, all people were working as one; people would try to find out the solution together. People would conduct territorial wide cleaning campaign in order to help put Hong Kong’s economy back on the right track. I hope we can do the same this time around. Let us set aside our differences and mend the rift. For the well-being of Hong Kong, we should sit down and talk. It is because if the riots continue, they will not produce any good results. It will definitely be the low-income groups who will bear the brunt of the riots. More importantly, if someone seeks “mutual destruction”, you should think about it as your family members will also be the victims of “mutual destruction”, the jobs of your parents and relatives will also be at stake. For that reason, I hope that people will not selfishly insist on their ideas. After all, nobody has promised you anything. What will happen as a result of “mutual destruction”, if you ask some Members, they will not tell you “Sorry, I should not have taught you to seek ‘mutual destruction’ tactics, because it would cause you problems”. They will not tell you, as they might have already made an arrangement to settle down in some overseas countries.
For that reason, I hope everyone should maintain a sober mind. To be jailed is very depressing. Some people have already said that they could not use their mobile phones to surf the web in detention centres. It is quite painful for those who are arrested. It is hard for them to stay there for several weeks, let alone the possible years of imprisonment. It is heartbreaking to us. We know all along that they should not break the law. They should understand that we want to help them. We urge everyone not to take a wrong turn.
CHAIRMAN (in Cantonese): Mr CHAN Kin-por, please come back to the question of this motion debate.
MR CHAN KIN-POR (in Cantonese): Okay, Chairman. All in all, if the current situation persists, it will take a heavy toll on Hong Kong. Therefore, I support the amendment, and I also hope that the Government will think more deeply and study how to completely revamp Hong Kong’s economic environment. This will be a real help to Hong Kong people. Thank you, Chairman.