Speech on Motion on Alleviating Poverty

Mr President
At this debate on alleviating poverty, several learned colleagues have proposed Amendments to the original Motion. I support most of them but have strong reservation on reforming the tax system. Admittedly, poverty is getting worse. We have too many ideas to tackle the problem but too few thoughts to deal with it at source. If we do try to resolve poverty at source, we would realize why “the poor is getting poorer despite the help offered”.

There are several causes of poverty but two are fundamental. They are failure of population policy and economic imbalance. I have spoken on these subjects on different occasions and shall not repeat. However, I would like to recap on the question of population policy.

In fact, poor population policy imports poverty. No matter how much help is offered to new arrivals, Hong Kong is still getting poorer. According to immigration statistics, most arrivals on single journey permit for family reunion have received primary or secondary education only. More than half of them were housewives previously. Most of them could find just low income jobs and some are even unemployed. Admittedly, family reunion is human right but the Government should have been better prepared. For instance, have estimates of such arrivals been made and policies been proposed in response? Unfortunately, the answer is no. A case in point is Tin Sui Wai where social problems are mostly due to poor population planning. In my view, the Government should review population sustainability and policy right away for better policies on education, retraining, medicine, housing and economy etc.

Frankly, I am positive of helping the poor because major parties in this Council are putting in lots of efforts. I am sure that my learned colleagues would fight for this cause. Similarly, the Government would also be more responsive for public support. As long as suggestions are viable, the Government would not let the public down.

That said helping the poor needs money and a lot of money. All know “one must earn to spend”. It is common sense. The Government is indifferent. If we are “too generous” and unable to “make ends meet”, we would be depleting our reserves. This would not last long even if we are quite well off. We would become another Greece that could no longer afford to help the poor but also be cutting welfare. I am sure all of us now realize how despair is the Greek people. I wish all of us would also support the Government in exploring business opportunities for more revenue to support more public spending.

I support most proposals of my learned colleagues. However, I have reservation on a few and could not support them. The original Motion calls for tax reform. It proposes progressive profits tax of higher rates on higher profits and to study capital gain tax. Several learned colleagues say that higher spending on the poor might be met by higher taxation on profits. It is unilateral thinking and I beg to disagree. Hong Kong does not have the monopoly in doing business. One of our advantages is simple and low taxation. Many foreign investors are thus attracted to choose Hong Kong. Our main rivals, like Singapore and Shanghai have been reducing business taxation to steal investors away from Hong Kong. If we did the contrary, we would be “driving them away” to our rivals. If it did happen, we would be losing comparative advantage. Frankly, Singapore has caught up in many areas. It would not be long before Shanghai and even Guangzhou are catching up. In brief, raising profits tax would increase revenue in the short term but not in the long term. We are “drinking arsenic to quench thirst”. It is simply suicidal. As for capital gain tax, it would even step on vital principles in taxation and would be complicated in enforcement. It would not only impede our philosophy of simple and low taxation but also real interest of the public at large. The community would be more confrontational. We all would definitely be losers. Thus, I cannot support these proposals.

With this observation, I conclude my remarks.

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