19 February 1998
Democratic Party Assesses 1998/1999 Budget
Financial Secretary Donald Tsang yesterday unveiled Hong Kong's 1998-1999
budget, as one of the region's worst financial crises in decades continues.While
approving the government's recognition of the need to spur international
confidence and stimulate the economy and the Financial Secretary's adoption
of a number of Democratic Party recommendations, party leaders said the
steps were insufficient in the face of an economic downturn whose impact
is being felt across all sectors of the society.
The Democrats lauded the government's acceptance of proposals made by
the party, including mortgage relief and tax incentives for the commercial
and industrial sectors, but criticised the administration's failure to
address the long-term consequences of the economic crisis and to utilise
the budget surplus to adequately reduce continuing economic pressures.
In particular, the Democrats criticised the government's budget methodology,
as the administration once more proved unable to accurately predict a massive
surplus. Party leaders observed that the surplus of $77 billion for 1997/1998
once again dramatically exceeded (by double) the government's estimation
and that the accumulated surplus would reach a record high of $445.6 billion.
The Democratic Party believes the government should consult the public
and then formulate strict guidelines and rational criteria to avert what
has become an annual accumulation of excessive surpluses.
In terms of expenditure, government spending should at least equal the
growth of the economy. Thus, the administration is in a position to spend
another $20-30 billion dollars to alleviate the current economic hardship.
Steps such as cutting rates and increasing the personal training exemption
to $40,000 will assist citizens in weathering the economic downturn. The
government also has the resources to increase the Comprehensive Social
Security Assistance (CSSA) to $2,900 and should investigate other ways
to assist Hong Kong's most vulnerable sectors as the economic crisis continues.
As the Financial Secretary has conceded, a major hardship faced by Hong
Kong citizens is maintaining mortgages for their homes as the government's
defense of the Hong Kong dollar continues to cause painful interest rate
hikes. While welcoming the government's mortgage relief concession of up
of to $100,000 a year for a duration of five years, the party noted this
is not sufficient to reduce the current harsh burden on home-owning families.
Democrats had proposed that rates be reduced from 5% to 2% to cancel out
those who need to pay the 3% "land rent" during the financial
downturn. The government, however, only reduced rates from 5% to 4.5%.
The Democratic Party also believes that the government should postpone
the pre-payment of taxes for half a year as to relieve the current economic
strain on taxpayers.
Given the current record surplus -- which is Hong Kong people's money
saved for just such a rainy day -- the Democratic Party believes that the
administration has the capacity to and should both balance the budget while
taking steps to alleviate the economic burden on tax payers and home owners.
For further analysis or comment, please contact the Democratic Party's
spokesman on the Budget, Mr. Sin Chung Kai, on 7223-9520.