Scrap Hong Kong’s ‘outdated’ property cooling measures and refrain from introducing new taxes, pro-business groups urge finance chief Paul Chan

Scrap Hong Kong’s ‘outdated’ property cooling measures and refrain from introducing new taxes, pro-business groups urge finance chief Paul Chan

Pro-business parties and politicians have urged the Hong Kong government to scrap all property cooling measures and refrain from introducing any new taxes in their recommendations to the finance chief ahead of his budget address next month.

Lo Man-tuen, a former vice-chairman of the All-China Federation of Returned Overseas Chinese, on Monday said dropping the “outdated” measures would boost the economy and ease residents’ anxiety, noting the recent poor performance of both the property and stock markets.

“There is no need for the government to adhere to outdated measures, and it should swiftly abolish any remaining stamp duties on real estate transactions,” he wrote in a newspaper commentary.

“Ditching all cooling measures does not involve providing any preferential policies or even government subsidies for property purchases. It is not a form of market manipulation.”

Hong Kong’s property market needs time to adjust to measures: John Lee

The Post has contacted Lo for further comment.

Political organisations, lawmakers and community groups are submitting their views to Financial Secretary Paul Chan Mo-po, who will deliver his budget address on February 28, in which he is widely expected to take aim at a ballooning deficit estimated to exceed HK$100 billion (US$12.8 billion).

Popular calls have included scrapping curbs such as a special stamp duty applied to a residential property resold within 24 months, a homebuyer’s stamp duty applied to non-permanent residents and a double stamp duty on flats for second-time purchasers. The stamp duty rates range between 10 and 20 per cent.

Business and Professionals Alliance chairman Lo Wai-kwok said that maintaining the cooling measures would “totally go against” the reality of the city’s weak property market amid a slow economic recovery after the pandemic.

Hong Kong watchdog’s move against agency ‘ringing alarm bells’ for other sectors

“If the budget does not include any measures to boost the property market, we can expect a more gloomy economic outlook,” he said, urging Chan not to “turn a blind eye” to the calls made from various sectors.

Lawmaker Doreen Kong Yuk-foon was also among those submitting proposals to Chan, saying she favoured dropping all property market curbs as soon as possible.

“Who will now engage in property speculation? In fact, we want property speculation [to enliven the market],” she said.

Finance chief Chan has said retaining cooling measures is part of efforts to help first-time buyers get onto the housing ladder.

image
Financial Secretary Paul Chan (right, centre) at the World Economic Forum meeting in Davos. He says retaining cooling measures is part of efforts to help first-time buyers onto the housing ladder. Photo: ISD

In his policy address last year, Chief Executive John Lee Ka-chiu began rolling back some property curbs, choosing to halve the homebuyers’ stamp duty for non-permanent residents and for additional properties. The move brought both down to 7.5 per cent from the previous 15 per cent.

Professionals arriving in the city under different talent recruitment schemes are only required to pay stamp duty on property purchases if they fail to become permanent residents.

Investment in Hong Kong property fell by 28 per cent to HK$37 billion in 2023, its lowest level since the 2008 financial crisis, but is expected to rise to HK$50 billion this year, according to consultancy Colliers.

Andy Kwan Cheuk-chiu, director of the ACE Centre for Business and Economic Research, said removing all cooling measures would help to stimulate the economy by providing incentives to buyers to participate in the property market.

But the economist warned that the boost would not be “too substantial” considering the overall low market confidence due to the less optimistic outlook for China and the world in coming years.

Hong Kong to sell smaller plots of land to boost sales, development chief says

The former federation vice-chair Lo Man-tuen also pointed to the government’s recent failed land tenders and a prolonged slump in Hong Kong’s stock market, with its Hang Seng benchmark index dipping to levels last seen in October 2022 just before the country abandoned its zero-Covid policy.

The index has declined by more than 10 per cent in the opening three weeks of the year.

Legislators also urged the government to refrain from introducing any new taxes.

Lawmaker Andrew Lam Siu-lo, who also met Chan on Monday, said the government’s priority should be to stabilise investor confidence.

He said he opposed the imposition of any taxes that would weaken the city’s competitiveness, given Hong Kong’s externally oriented economy.

Jeffrey Lam Kin-fung, a member of the key decision-making Executive Council, said new taxes were “not suitable” at present, as they would deal a heavy blow to retailers.

image

  

Read More

Leave a Reply