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February 29th, 2008:

Booming Hong Kong Cuts Taxes As Surplus Soars

6 days ago

HONG KONG (AFP) — Hong Kong’s financial chief on Wednesday promised sweeping tax cuts for workers and businesses and abolished duty on wine and beer on the back of a record budget surplus.

In his maiden budget speech, Financial Secretary John Tsang said he would increase spending on health services and introduce measures to bridge the widening wealth gap and reduce air pollution.

Duty on beer and wine will be abolished with immediate effect in a move aimed at creating a regional wine trading and distribution market in the southern Chinese territory, he said.

Wine consumption in Asia has risen sharply in recent years and Tsang said industry forecasts suggested there would be “considerable growth in table wine spending in this region.”

Tsang said the giveaways were made possible by a record budget surplus estimated at 115.6 billion dollars (14.8 billion US) in the year to March, four and a half times the government’s forecast and nearly twice as much as last year’s figure.

The territory’s reserves will reach 484.9 billion dollars, he said.

Tsang, who took over as financial chief last July, attributed the surplus to higher-than-expected tax revenues from the city’s booming stock and property markets as well as company profits and salaries.

Income taxes — already among the lowest in the world — will be cut to 15 percent in 2008-09 from 16 percent, while the corporate tax rate will fall to 16.5 percent from 17.5 percent.

Tsang announced a one-off 75 percent income tax rebate, up to a 25,000-dollar ceiling, and a rise in various tax allowances. Property taxes will also be subject to a one-off 75 percent rebate, up to a 25,000-dollar limit.

To combat worsening pollution, the government will introduce tax concessions for environmentally-friendly commercial vehicles and for companies that use green machinery and equipment.

The huge spending spree means Hong Kong will incur a 7.5 billion dollar deficit in 2008-09, Tsang said.

But credit agency Standard and Poor’s said it would not affect Hong Kong’s rating.

“This stance is prudent in view of the uncertainties over near-term fiscal performance,” said S and P credit analyst Kim Eng Tan.

Tsang said he would use this year’s budget surplus to help elderly or disadvantaged people and those on low incomes who had not benefited from the city’s economic boom but had been hit hardest by rising prices.

He announced one-off welfare payments, an increase in old age and disability allowances and increased spending on health care.

The government also plans to use its swelling coffers to boost tourism, building a new cruise terminal and increasing the capacity of its two runways to meet the expected growth in air traffic, with a third runway being considered.

Looking ahead, Tsang said he was “cautiously optimistic” about the city’s economic prospects for 2008, forecasting growth of between four and five percent in 2008/09 with inflation at 4.5 percent.

Tsang said the impact on Asia and Hong Kong of the credit crunch in the United States and Europe had so far been limited, but warned the city could be hit by the resulting global uncertainty.

“We should be aware of the possibility that the situation might deteriorate in the near future and that the fallout may be prolonged,” he said, adding he would be cautious about future spending in the face of a global economic slowdown and rising inflation.

Tsang said the economies of Hong Kong and China were becoming more closely integrated, with the mainland economy now at a crucial stage of change.

He cautioned that the upgrading of mainland industries would bring more competition to Hong Kong, while measures to cool China’s overheating economy could also impact the city.

Should The Proposed Incinerator Be Built?

Updated on Feb 29, 2008 – SCMP

The government plans to build an incinerator either in Tuen Mun or on Lantau. I appreciate that building an incinerator can help reduce the pressure on Hong Kong’s landfills.

In Tuen Mun, it has been argued, after the treatment of trash at the incinerator, the energy produced could be easily transferred to the power grid.

In spite of all this, I do not support the construction of the incinerator.

I think it will be able to cope with only about one-third of Hong Kong’s trash.

The remainder of the city’s waste will still end up being transported to our landfills.

This may allow us to use the landfills for a longer period, but it does not solve the main problem.

Also, I am concerned that the incinerator may cause pollution which could damage the environment. This would be particularly bad for residents living near the site.

If it was built on Lantau, I am worried about what effect it would have on the surrounding landscape and on marine flora and fauna.

It would cost a lot to build and its annual operating costs would also be expensive.

It could end up being a financial burden for the city’s taxpayers.

The government can learn from Japan and Singapore. Both are making great progress with recycling.

If all of us work together at recycling, this would be far better than having an incinerator.

Ho Mei-ying, Cheung Sha Wan

Hong Kong Willing To Share Data On Incinerator

HK willing to share data on incinerator

Cheung Chi-fai – Updated on Feb 29, 2008 – SCMP

Hong Kong was willing to share information and exchanges about the possibility of locating a waste-to-energy incinerator in Tuen Mun following concerns over its impact raised by Shenzhen residents, the environment chief said yesterday.

The remark came at a meeting with Tuen Mun District Council at which officials failed to convince the local politicians to support the project.

They instead passed a motion rejecting moves to site the incinerator locally.

It was the first time senior environmental officials had consulted the politicians since two potential sites were announced last month for the 3,000-tonne capacity incinerator – at the ash lagoon in Tsang Tsui or at Shek Kwu Chau off Lantau.

This week, Shenzhen residents vowed to oppose the plan, fearing that emissions from the plant might affect their health.

Some councillors said numerous polluting factories had been built in Tuen Mun and were upset that their district now looked even worse environmentally than Shenzhen.

Yim Tin-sang said that just a few kilometres away the Shekou district was being given a facelift to turn it into a prosperous commercial-residential zone along their coastline.

“But look at us, we are trashing our beautiful coast with landfills and incinerators,” he said.

Chan Wan-sang asked whether Hong Kong would consult Shenzhen residents about the incinerator.

Anissa Wong Sean-yee, director of environmental protection, who attended the meeting, did not directly address the issue, but she stressed there was uncertainty on the site selection before an environmental assessment was carried out.

2008 Hong Kong Government Budget

Chance To Cut Tobacco Sales Squandered 

Feb 29, 2008 – SCMP

Wednesday’s budget was a shocking indirect declaration from the government that it does not care about the health of our society.

Firstly, Financial Secretary John Tsang Chun-wah, failed to raise tobacco taxes, now for the eighth year in a row, making these taxes less than any other developed country. Had he doubled the tax rate, in order to be closer to the World Health Organisation guidelines, the government would have sent a message that it wants to reduce youth smoking by 32 per cent. There is a direct correlation between the reduction in smoking uptake rates and the price of cigarettes. Similarly, it would have resulted in an estimated drop of 20 per cent in adult smokers, and would have generated HK$2.5 billion in new revenue which could have been used for health, welfare and the environment.

In fact, failure to raise the price of tobacco is a direct contravention under the terms and conditions of the WHO’s Framework Convention on Tobacco Control. China is a signatory to this framework, and our government is obliged to follow this doctrine. Our own Dr Margaret Chan Fung Fu-chun, director-general of the WHO, said that “this is now one of the most widely supported treaties in the history of the United Nations. This is primary prevention at its best”.

Secondly, the government’s plan to subsidise electricity rates by HK$1,800 per household is a move that blatantly snubs the environment and runs counter to our leadership’s moral obligations to protect it. This sends the message that consumers can use even more electricity and not worry about conservation, efficiency or price impacts which should come with a properly-designed electricity pricing system based on peak demands. One would be hard-pressed to find any administration in the world today that would dare to be seen to encourage more energy consumption. Instead, these funds could have been used to create a modern, forward-looking energy policy.

The budget has demonstrated that the government has little consideration for our health. It is thus not hard to understand why our air quality objectives have not been revised in 20 years. The government’s failure to uphold its civic obligations has now further eroded its ability to convey trust. This confidence is greatly needed in order for our community to believe that something is being done to improve our environment.

Douglas Woodring, chairman, environmental committee, American Chamber of Commerce

Better Air Quality Engagement

Council for Sustainable Development’s Report on the Better Air Quality Engagement Process

Hong Kong has wrestled with the challenges of development over the years. Transformed from a manufacturing-based city to becoming a provider of the sleek service operations that are now on offer, Hong Kong has been successful in re-inventing itself as the need calls. But the urgency now lies with tackling our air pollution problem.

For many years, the price for Hong Kong’s development has been the environmental impacts caused by our energy consumption and transport usage. Our air quality has steadily declined as a result of the boosted levels of pollutants emitted and the lowered visibility that obscures our world famous landmarks like Victoria Harbour - and our health has suffered as a result.

It is not just our health either; Hong Kong’s image as a modern city is not given credence by the state of our air. Companies are facing problems attracting talent to our shores, the efficiency of our workforce is being affected and our young and vulnerable are facing severe challenges from breathing polluted air. From Government officials to the grassroots, the message has been clear - it is time to act.

This report by the Council for Sustainable Development which represents the fourth stage in its engagement process seeks to bring about a fundamental change in Hong Kong’s approach in tackling air pollution and aims to strengthen the political intent behind the Hong Kong Government’s efforts in this area as well as freeing up much needed resources to resolve this urgent matter.

Working with the Government, business and civil society, the Council is a platform for the views of parties with different interests to converge with the joint aim of resolving Hong Kong’s air quality problem. The Council has carried out one of the most intensive and comprehensive public engagement process in Hong Kong’s history. Over 80,000 people responded to the Council’s call insisting that action be taken to protect the health of Hong Kong’s citizens – on the strength of this number – the Council now believes it has the right to speak out on behalf of the community.

The Council’s report is structured as follows:

  • Background – in which the Council explains the basis for its work and the process through which it engaged over 80,000 stakeholders.
  • The Engagement Process – what the findings showed from the engagement process and what we have learned.
  • Recommendations – the Council provides its recommendations covering the major sectors including power, transport and business and invites the Government to respond.

The records of the written submissions received by the Council during the engagement process can be found on, as part of the Independent Evaluation of Feedback by the Social Sciences Research Centre of the University of Hong Kong.

See the full Council for Sustainable Development’s Report on the Better Air Quality Engagement Process here