Ordinary Gweilo

Sometimes it seems that Jake van der Kamp struggles to find things to write about in his daily SCMP column – you may recall that he was famously caught out by an April Fool joke earlier this year.

However, he has really got stuck into the debate on GST.  Unfortunately you need a paid subcription to read these articles, but they are worth some of your time if you do:

Great taskmaster Tang fails to do his homework on needless GST (which I wrote about here)

Make your own case properly before preaching to us, Mr Tsang

And how can you be so certain that GST is the right thing for us when most people seem to think it is the wrong thing? If your knowledge is so superior to ours, why bother with a public consultation on GST at all? You should disdain our faulty understanding in that case, as your financial secretary does.

"Evasion is never a way out."

Glad you recognise it, Sir. Here are some points not to evade then. 1) GST would not significantly reduce the volatility of government revenues. 2) We have a wide fiscal revenue base that you can call narrow only by ignoring significant sources of revenue. 3) We have plenty of savings to cover deficits in bad years. 4) We now have accruals accounting to show us that our past deficit – we are well into surplus at present – was never that bad anyway.

Don’t listen to Henry, we’re rolling in reserves and should use them

"The fiscal reserve totals about HK$300 billion, but the finance chief [Henry Tang Ying-yen] said: `We used HK$190 billion from the reserves to survive the last recession. When the next economic cycle comes, the total deficit we face could be much bigger than HK$190 billion. We do not have much left to keep us afloat’."    SCMP, September 9

[..]

What we are left with after taking out amounts owed to others is two items. The first is HK$312 billion in government placements, which, I assume, is the figure Henry refers to.

Then there is HK$468 billion in accumulated surplus. This is ours. The government is the sole owner of the Exchange Fund.

Put the two together and you get HK$780 billion in savings. So it is just not true, Henry, that "we do not have much left to keep us afloat". We have plenty.

I am waiting for the government to respond.

[Update: all links seem to be broken.  The SCMP appear to be messing around with their site.]