It would cost more than HK$50 billion annually after 30 years and hurt the city’s competitiveness, warns Professor Chan Ka-keung
ALLEN.AUYEUNG@SCMP.COM
PUBLISHED : Sunday, 03 January, 2016, 8:27pm
UPDATED : Sunday, 03 January, 2016, 8:56pm
Elderly people from the Society for Community Organisation (SoCO) and Elderly Rights League protest against the consultation on retirement protection and call on the government to safeguard elderly benefits. Photo: Nora Tam
A universal retirement protection proposal that would benefit every elderly person is not financial feasible and would add pressure to the government’s budget, making tax increases unavoidable.
That’s the verdict of Professor Chan Ka-keung, Secretary for Financial Services and the Treasury. In his blog yesterday, Chan warned that any policy suggestions to enhance retirement protection would “add pressure on the government’s budget” and the rise of taxes would be “unavoidable”.
“If the principle of ‘regardless of rich or poor’ is adopted, a uniform financial assistance is provided to all elderly. Measured by today’s prices, after 30 years, the additional annual expenditure will be over HK$50 billion,” wrote Chan.
He was referring to a universal retirement option in which the government hand out HK$3,230 a month to all Hongkongers aged 65 or above regardless of their incomes or savings.
“That’s nearly equal to today’s total recurrent expenditure on social welfare or health care. [It’s] financially unfeasible,” he said.
According to Chan, there are now 15 people aged 65 or above for every 100 people in Hong Kong. He estimated that the proportion would double to 30 elderly people to 100 people by 2046.
To find the money to fund retirement protection, Chan said the unavoidable consequence would be an increase of taxes.
“When the government has to increase its burden, it’s avoidable taxes would be raised,” he said.
“But the increase of taxes will hurt Hong Kong’s competitiveness, affects economic growth, and enterprises and talents may become hesitant [to come to Hong Kong] to invest and work ... So, we must be careful,” he warned.
Questioning the fairness of the universal option, Chan also asked whether it was just to ask the younger working generation to pay more taxes to support the retired generation, regardless of the economic needs of the latter.
Chan’s remarks came as the government began to consult the public for six months on two retirement protection options unveiled last year by Chief Secretary Carrie Lam Cheng Yuet-ngor.
Besides the universal retirement protection option, the government put forward a non-universal “those with financial needs” option, which gives a monthly allowance of HK$3,230 to elderly people with assets below HK$80,000 and a monthly income capped at HK$7,340.
Labour Party lawmaker Peter Cheung Kwok-che, representing the social welfare sector, criticised the government for always putting the focus only on money.
“The government only talks about money now,” he said. “The focus of retirement protection should be about giving back to the elderly who spent their lives contributing to the prosperity of Hong Kong.”
http://m.scmp.com/news/hong-kong/politics/article/1897816/tax-rises-unavoidable-if-everyone-over-60-gets-pension-warns
