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President, since Hong Kong follows a policy of simple tax rates, its financial management system is relatively simple and clear. We in the business sector have no objection to a reasonable tax regime, but we often find that public funds derived from tax revenue are not put to good use after redistribution. The Business and Professionals Alliance for Hong Kong (BPA) supports the Government using public funds to take care of the needy, but many of these initiatives can only provide temporary relief to alleviate the public’s financial hardships. Instead of offering tax reduction, therefore, we think that the authorities should introduce a wide range of concessionary policies to take care of the grassroots and offer tax concessions to the middle class while using public funds to invest in the future for the purpose of promoting upward mobility in society and enhancing Hong Kong’s competitive edge.
The BPA is concerned about the middle-class people, whose tax burden is the heaviest, because they face the crisis of dengentrification. Insofar as short-term initiatives are concerned, Mr Jeffrey LAM pointed out just now that the BPA had put forward various policy proposals to help the middle class. In the long run, however, we think that the Government should, as proposed by the Chief Executive in the policy address and mentioned by the Financial Secretary, set an ideal target to gauge the medium- and long-term development in, for instance, 10 years’ time with the goal of doubling the size of the middle class from between 20% and 30% to 50% of Hong Kong’s population.
The Government should make use of our financial reserves and policies to invest in the future. On education, in addition to continued promotion of diversified education, we propose that free vocational and educational training be provided free to skilled workers aged 40 or below so as to enable them to advance to the third level of the Qualifications Framework. People having reached this level means that they should have already acquired a professional skill, and they should have no problem in making a living. Moreover, they are already regarded as marginal middle class. In my opinion, their problems can only be resolved through these long-term investments, whereas the Government cannot assist them in moving upward by continuing to build public housing and offer assistance to the grassroots.
On investment in business ventures launched by young people, we propose that the Government should encourage more young people to turn their businesses into SMEs and then join the middle class. We hope the Government can allocate $2 billion to the construction of a “youth entrepreneurship park” and, together with all the existing organizations supporting the launch of businesses by young people, set up a platform for the masses to raise funds and draw on collective wisdom, so that young people can get together and succeed. Certainly, as I proposed more than a decade ago, the Government should provide tax concessions for the creative industries and scientific research by offering triple tax deduction as an incentive. Only in doing so can young people see their prospects and dedicate themselves to launching businesses. Most importantly, if the ratio of the middle-class people in Hong Kong can be raised to more than 50%, as in the United States and South Korea, I believe Hong Kong society will be a lot more peaceful.
Next, President, I would like to point out that SMEs account for more than 98% of all local enterprises. Given the prevailing uncertainties in the economy, in order to enable SMEs to have more ammunition to face competition and the persistently poor economic environment, I propose that the Government consider setting a lower tax rate, such as 10%, for SMEs with a profit of less than $3 million in order to encourage reinvestments. Furthermore, the Government should make reference to the personal assessment allowance for the introduction of an additional allowance for SMEs to enhance their competitive edge.
Certainly, I have mentioned section 39E of the Inland Revenue Ordinance to the Secretary many times before. This issue was also mentioned by a Member just now. In particular, SMEs which have factories built on the Mainland are in desperate need of the offer of tax concessions in Hong Kong. We have also asked the Secretary why section 39E cannot be reviewed, given the 50% concession now offered to captive insurance, as pointed out by the Secretary just now, and the previous tax concession offered to offshore funds. I think that the Government should give serious thoughts to this issue.
Meanwhile, any concession or abolition of taxes will not necessarily reduce the revenue of the coffers. On the contrary, it might bring Hong Kong new business opportunities and room for development. The red wine duty is a case in point, for Hong Kong is still the world’s largest centre for the sales of red wine. On the other hand, the abolition of estate duty has also made Hong Kong Asia’s asset management centre.
With global industries moving toward environmentally-friendly and knowledge-based development, Hong Kong should develop more high value-added manufacturing industries. Regarding the industries mentioned just now, such as scientific research, we think that the Government should give them active consideration and, through adding design and high value-added elements to the products, create “cluster” effects and attract more young people to join the creative and scientific research industries.
The BPA believes that only through investing in the future can we assist the middle class in moving upward. The Secretary should know that Francis BACON, a renowned British philosopher, once said, “Money is like muck, not good except it be spread.” Compared with the handout initiatives which can only offer short-term relief to the public, we think that there is a greater need for the Government to focus on the future, develop a diversified economy, improve education and manpower training policies, complement the development of Hong Kong’s knowledge-based economy and give a boost to social mobility, in order to provide the middle class with opportunities of continued upward movement and enable the grass-roots people to climb up the social mobility ladder to join the middle class to make the latter even stronger. I hope the Government can stop behaving like a miser and proactively make investments in the future instead.
President, I so submit.