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(16 November 2012) The Bauhinia Foundation Research Centre today submitted a policy paper to the Financial Secretary’s Office, advocating short and medium-term measures to relieve the burdens of the elderly, first-time home purchasers and regular long distance travellers.
The policy paper has been put together on the basis of the Centre’s relevant research findings and taskforce discussions.
The Centre’s Chairman Dr Donald Li said, “We appreciate the recent initiatives of the Government to promote the socioeconomic well-being of Hong Kong. However, the weakening momentum of global economic growth and widespread monetary easing worldwide have blurred the outlook of the economy and posed new challenges to people’s livelihood.”
Against this backdrop, the Centre believes it is of utmost importance for the Government to put in place corresponding policies to tackle the most pressing issues arising from an ageing population, rising costs of living and the soaring property market.
According to the population figures released by the Census and Statistics Department, the proportion of elderly population, i.e., those aged 60 and above, is projected to rise from 19% in 2011 to 36% in the next 30 years. To mitigate the adverse impact of an ageing workforce, the Centre advocates raising the tax allowances for those aged 60 or above who are assessed to salaries tax or have elected personal assessment from HK$120,000 in the fiscal year of 2012/2013 to HK$150,000 or even HK$180,000.
Under the Centre’s proposal, a taxpayer aged 60 or above may claim allowable deductions for their contributions to personal health insurance of up to HK$12,000, as well as expenses for residential care, community care services, dental care and self education with a cap set at HK$76,000, HK$60,000, HK$8,000 and HK$5,000 respectively.
These measures not only help meet the diverse needs of senior people, but also offer incentive for them to continue contributing to the workforce, and in the long run, easing the negative impact of a shrinking labour force on Hong Kong competitiveness.
On assistance for first-time home purchasers, the Centre has all along advocated a shared ownership scheme to aid households whose monthly income is just above the income limit of Public Rental Housing Waiting List and below that of the former Sandwich Class Housing Scheme.
According to the Centre’s suggestion, eligible applicants may purchase 50% of a flat and co-own the premises with an intermediary designated by the Government. The applicant will pay a concessionary rent for the other 50% of the flat, and has the option to buy back this 50% at the original price within a fixed period of time. The rent already paid, or part of it, will form part of the final purchase payment. The scheme may take a variety of forms to meet the needs of the applicants and the ability of the intermediary.
Dr Li said, “Most young respondents to our housing survey in July considered ‘soaring property prices’ and ‘insufficient personal savings for downpayment’ the main hurdles to their home purchase plans. Our recommendation could offer an immediate helping hand to first-time home buyers. Nevertheless, the Government still needs to match the supply of land for affordable flats to the demand in the market in the long run.”
With regard to rising costs of living, the Centre reiterated the importance of a travel cost subsidy scheme to alleviate inflationary pressure. We recommend setting up a multi-mode monthly expenditure cap, applicable across various public transport modes, on qualifying trips made by regular long distance travellers. As the intention is to benefit long distance travellers, it is proposed that only trips (which may include feeder trips on different modes made within a proposed time period, i.e., 90 minutes) costing $14 or above should be counted under the scheme.
The money cap will be triggered once the monthly transport expenditure for such trips exceeds HK$700. Further transport expenditure will be paid by the Government through the Octopus Card until it reaches HK$1,000, while the passengers will have to pay for any subsequent travel cost. The scheme is proposed to be non-means tested as its targets are not just low income groups and is expected to cost the Government about HK$1.1 billion to HK$1.4 billion a year.
“The Government should provide subsidies to make long distance travel more affordable so that people will become more willing to move away from the already densely populated urban areas to outer zones for the sake of sustainable development,” added Dr Li.