HK lawmakers warn on housing policy

Pro-business lawmakers in Hong Kong on Monday asked the government not to meddle too extensively with the city's market economy by applying the extended special stamp duty and the new buyer's stamp duty on certain types of real estate transactions.

They warned that the additional taxation applying to real estate speculators and foreign home buyers could scare foreign investors away to other places.

Lawmakers from the Business and Professionals Alliance for Hong Kong met Chief Executive CY Leung and Financial Secretary John Tsang on Monday to give their suggestions for the 2013 Policy Address and Budget.

After the meeting, the alliance's Chairman Andrew Leung said since the external economy still looks difficult, the government should be wary of the effects on Hong Kong. And as Hong Kong is the freest economy in the world, it will drive away foreign investors if the government is seen to be exerting too much interference in the free market.

"We worry that the buyer's stamp duty will shake Hong Kong's free economy, which is the cornerstone of the success of Hong Kong," said Leung. "Is it fair to introduce a buyer's stamp duty at a rate of 15 percent to target foreign investors buying properties to accommodate their senior executives? If they are scared, they may leave Hong Kong and choose Shenzhen and Singapore instead."

Leung continued that the local property market has not shrunk and is beginning to rebound after new market stabilization measures were announced at the end of October, while the effectiveness of the similar additional stamp duty to stabilize the property market in Singapore has not been proven.

"The government should increase land supply through conversion of industrial sites. If there is an adequate land supply, it will signal a clear message that there will be adequate housing supply," he said.

The alliance also proposed a range of business and quality of life measures. For small and medium enterprises with profits below HK$3 million ($387,074), a lower tax rate of 10 percent should apply. In view of the gloomy economy, they proposed a HK$1 billion transition fund to assist the unemployed to transform or start their own businesses.

The Chief Executive and financial secretary also met representatives from the Hong Kong Federation of Trade Unions to hear their suggestions. The federation's president, Lam Shuk-yee, said after the meeting that the group pressed its appeal for legislation of standard working hours. If employees are asked to perform overtime work, they should be paid at 1.5 times their normal salary.

The unionists also demanded a yearly review, instead of bi-yearly, of the statutory minimum wage, so that the statistics on which the hourly rate is based are closer to the market situation. In light of aging population, they urged the government to launch a retirement protection scheme as soon as possible.