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The Chief Executive delivered the 2016 Policy Address last month. And on Wednesday Financial Secretary John Tsang Chun-wah also announced the 2016-17 Budget. The macro-economic environment is still experiencing a downturn.

Benefiting from stamp duty revenue, the budget surplus of the 2015-16 financial year is estimated to be about HK$30 billion. Whenever there is a surplus, there will be people in society asking for tax cuts, more welfare payments and so on. I have always been a strong supporter of sharing our economic gains with the grassroots. I am pleased to see that the SAR government each year has reinforced efforts aimed at poverty alleviation.

The new Budget tabled by the financial chief suggests easing the burden on citizens by reducing salaries tax and tax under personal assessment for 2015-16 by 75 percent - subject to a ceiling of HK$20,000. This proposal will benefit 1.96 million taxpayers but reduce government revenue by HK$17 billion. As for increasing welfare expenditure, I believe it is supported by most people as long as the government has sufficient resources, as any welfare increases have to be affordable. For the sake of fairness, Tsang decided to scrap the policy of waiving monthly rents for public housing tenants. Since 2008, the SAR government has paid a total of 15 months' rent for all public housing tenants. The financial secretary's decision has angered some people, who claim that the SAR government is being too parsimonious in regard to public housing tenants. But I do not think there are many solid reasons for criticism.

In a city like Hong Kong where land resources are extremely rare and precious, the costs of housing (for both property owners and tenants) remain a contentious issue. Some even say the only real asset Hong Kong has is its limited supply of land. Indeed, Hong Kong has the most premium-price real estate in the world. The price per square meter ranges from between HK$77,000 to over HK$130,000 depending on the location. So, public rental housing tenants seem to be much luckier than other residents because they only have to pay around HK$2,000 to the government for a decent 400-square-feet apartment in the urban area, whereas their peers in the private housing sector would have to pay around HK$12,000 for a comparable private flat.

Some would argue that public rental housing tenants have lower incomes so they deserve further rent subsidies. But in many cases, their lower incomes are more than compensated for by much lower rents. What is more, we cannot deny that there are many tenants who have amassed enough wealth to make them no longer eligible for public housing. There is still a long waiting list for public housing. Besides, the government also shoulders the expense of rates, management and maintenance costs for the public housing estates.

Interestingly, a couple of years ago the Hong Kong Housing Authority put forward a "zero-rent" proposal: Eligible public housing tenants can enjoy "zero-rents" as long as they pay the apportioned management and maintenance fees for their buildings. The proposal was fiercely opposed by tenants before it was announced officially. As a result, the proposal was eventually abandoned by the government. This has further confirmed that the rents paid by public housing tenants are not even enough to cover the above-mentioned fees. In other words, the tenants are already enjoying at least double benefits provided by the government: One is low-priced rents, and the other is the long-term "subsidies" for rates, management and maintenance fees.

Other than paying the rents for a month or two for the public housing tenants, I believe the government will continue to figure out other appropriate and efficient ways to help alleviate poverty. As noted in the budget speech in the chapter "Supporting the Underprivileged", "The government has made proactive efforts to help those in need through social welfare measures. Recurrent expenditure on social welfare for 2016-17 is estimated at HK$66 billion, accounting for 19 percent of recurrent government expenditure. This has doubled compared with 10 years ago."

(HK Edition 02/26/2016 page10)

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