Disappointment In Hong Kong Over Tung's $15 Billion Crisis Package

by Mary Swire, Tax-News.com, Hong Kong

12 October 2001

There was disappointment on Wednesday as Chief Executive Tung Chee-hwa gave the fifth and final Policy Address of his five year term, entitled 'Building On Our Strengths, Investing In Our Future'.

Mr Tung painted a gloomy picture of the future for the jurisdiction, predicting that: 'Hong Kong faces an accelerated economic downturn, a rise in unemployment, an increase in the fiscal deficit and a delayed recovery...we have to prepare for drawn-out economic hardship.'

However, business leaders were critical of his address, which including only moderate tax relief and stimulatory measures. Speaking to assembled lawmakers, Tung announced that the government would cut property rates, raise the tax free allowance for home mortgage interest payments from $100,000 to $150,000, and give $1.9 billion in aid to small and medium enterprises.

Mr Tung admitted that this had been his most difficult policy address, with the terrorist attacks in the United States forcing him to make 'considerable changes'. However, yesterday he was criticised by many for spending too long going over old ground, and for not being specific enough about measures to tackle new problems caused by the terrorist attacks and resultant global economic climate.

Earlier this week, international accounting firm Deloitte Touche Tohmatsu submitted an eight point plan of short-term economic measures designed to stimulate the economy of the SAR, which included plans for a 10% refund of salaries, profits, and property taxes to Hong Kong residents in the form of retail coupons, and double tax deductions for rental expenses. The majority of these proposals appear to have been either ignored or dismissed by Mr Tung.

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