Submissions on the 2011-2012 Budget

Submissions on the 2011-2012 Budget by the Hon KP Chan

Insurance and Finance

1.    Introduce tax deductible insurance premiums – the Government should provide medical insurance allowance in the form of tax deduction at the launch of the Health Protection Scheme as an incentive to ensure a successful implementation. Tax credit should also be given to parents who purchase medical insurance for their children to encourage preparation for healthcare needs of families. Tax deductible premiums should be progressively expanded to other types of insurance to reduce reliance on the Government by encouraging citizens to plan for future, such as deductions for Life and retirement protection insurance like annuity, in anticipation of old age.

2.    Implement the second round consultation on the Independent Insurance Authority – without sufficient information and thorough discussion, the industry faces common anxiety amidst diverse views in the first round of consultation. The Government should put forward the second round of consultation with details of the proposal to allow for a comprehensive exchange with the industry.

3.    Guarantee future fund injection for the Health Protection Scheme – it is estimated that the $50 billion Government subsidy earmarked for the Scheme will last only for 20 years. Sustainability is in fact an essential element to the successful implementation of the Scheme. The Government should pledge to make future injection into the Scheme to remove concerns about the sustainability of the subsidy.

4.    Provide financial facility to the Policyholders’ Protection Fund – the Government will soon launch a public consultation for the Policyholders’ Protection Fund. Although the Fund will be financed by levy on the premium, the Government should provide an initial financial facility until the PPF has accrued sufficient funds.

5.    Expansion of the RMB bonds market – there are huge demands for RMB bonds in Hong Kong. The Government should strive for more Mainland, local and foreign enterprises to issue long term RMB bonds in Hong Kong. Substantial and continual issues of RMB bonds will not only reinforce Hong Kong as an offshore centre for RMB transactions but also promote insurance business in RMB.


With an anticipation of further inflation in the coming year which places intense stress on grassroots livelihood, the Government should propose those one-off and forceful measures to effectively relieve financial strain on citizens.

1.    Subsidise electricity bill – to reduce inflationary pressure on citizens, measures to subsidise for the electricity bill is advised to be extended for one year with the monthly maximum increased from $300 to $450 for all households.

2.    Subsidise water charges – the level of increase in electricity, gas and water are the highest amongst the various CPI components in the surging CCPI. The Government can consider subsidising water charges in addition to electricity to benefit a variety of families, especially those who do not exhaust the maximum subsidy on electricity.

3.    One year exemption on rates payment and one month rent-free period for public housing – measures to exempt rates payment and public housing rent will directly benefit citizens and relieve inflationary pressure.

4.    Raise the child and dependent parent/grandparent tax allowances to a proper level – Hong Kong has entered into an inflation period and inflation stress on citizens will continue to intensify. The Government is advised to simultaneously raise the tax allowances for child and dependent parent/grandparent from $50,000 to $100,000 and $30,000 to $60,000 respectively. The basic Tax allowance should also be reviewed.

5.    Subsidise the living, learning and extracurricular expenses of children in low-income families, consider a monthly composite student grant – with working poor a severe problem in Hong Kong, low-income families often find children educational expenses unaffordable. Combined with the existing School Textbook Assistance, Student Travel Subsidy Scheme and Subsidy Scheme for Internet Access Charges, the Student Financial Assistance Agency is recommended to issue a monthly composite student grant to subsidise for expenses in living, learning and extracurricular activities.

6.    Extend the 10 years entitlement of home loan interest deduction – mortgage repayment is the biggest burden to the majority of the middle class, to which home loan interest deduction is the most helpful. Introduced by the Government in 98-99, many citizens have exhausted the maximum entitlement of 10 years. The Government is advised to lengthen the entitlement to 15 years.

7.    Freeze Government charges – to avoid adding to the burden of citizens under high inflation, all Government charges related to livelihood should be frozen.

8.    Comprehensively review MPF and promptly consider universal retirement protection – the society has become concerned with inadequate protection of the MPF to the low-income and employed, while showing increasing support for a universal retirement protection system, which the Government should promptly reconsider in the face of an aging population.

9.    Speed up and expand public housing construction – the Government should speed up the construction of public housing to relieve grassroots citizens from devastating living conditions, meanwhile consider increasing the supply to allow more citizens to move in.

10.    Speed up development of new areas, create job opportunities – the Government should vigorously promote industries which require a large labour force such as local tourism and economic development, including organizing exhibitions of all sizes and establishing support services such as telephone service centres. The Government should also actively develop schemes similar to the Integrated Elderly Community Project to generate more elderly and rehabilitating accommodations, which not only will create more training and employment opportunities and accelerate the development of New Towns, but also ease the shortage of accommodations for the elderly.

Social sharing