CY’s good news for ex-smugglers

Lest we forget: quite a lot of the parallel traders who exploit glaring arbitrage opportunities by carrying goods like phones and Yakult yogurt drink north across the border are Hongkongers, not Mainlanders. The Shenzhen authorities would like to remind us of this, and are clamping down on these people in what the Standard calls ‘apparent retaliation’ for the Big Lychee’s crackdown on the Mainlanders swamping Sheung Shui.

It is hard to see the logic here. The Mainlanders transporting cargoes back to Shenzhen are breaking Hong Kong immigration laws by working here without the correct permit. Both they and the Hongkongers carrying goods are breaking Mainland laws by trying to evade payment of import/sales taxes. Hong Kong is applying its law correctly, and Shenzhen customs should be doing the same by requiring all travellers, from anywhere, to pay the duties and taxes they owe on items they are carrying.

Maybe that’s what this ‘retaliation’ is for. Could it be that when Chief Secretary Carrie Lam went to Beijing recently to moan about the Great Mainland Courier Menace, she effectively snitched on Shenzhen for not running its customs department properly? If so, it’s yet another in a long line of snubs by haughty Hong Kong officials towards their peasant-like counterparts around the Pearl River Delta.

People carry all this junk across the border because it pays better than washing dishes or picking metal and plastic out of garbage dumps. (Mainland demand for Yakult, I am reliably informed, arises from its supposed properties as a female breast-enhancer. Do they drink it or rub it on? No idea.) If smuggling is no longer an option, we can surmise, people will be poorer. What better time, then, for Hong Kong to announce that it will adopt an official poverty line for the first time and revamp the old Poverty Commission?

Chief Executive CY Leung seems to divide his administration’s time three ways: doing stupid things that provoke hostility; doing things that provoke hostility but could have been popular if better handled; and doing things that deserve acclaim but aren’t presented well enough to get it. This is in the third category; they should have made a bigger splash about it. Like the minimum wage – which the last government also bent over backwards to avoid before giving in – a poverty line will force officials and everyone to examine, measure, monitor and possibly end up with no choice but to do something about a problem previously swept under the carpet.

Welfare groups already use a poverty line: an income that is half the median household income adjusted for household size. In Hong Kong, where the median income for the top 10% of families is 27 times that of the bottom 10%, some 18% of the population live on such an income. The welfare lobby say that the cash benefits system is faulty in that it denies handouts to the poor if they live in (ie burden) a somewhat-less-poor household, and can be humiliating to apply for. Oxfam’s account seems to support this.

For an idea of how screwed up our redistribution of wealth is, consider an example that legislators could be shouting from the rooftops but for some reason don’t. A family on HK$100,000 a month with two kids gets HK$60,000 knocked off their annual salaries tax for each one. In other words, the rest of the community pay them the equivalent of HK$5,000 a month for each kid. A family on HK$15,000 a month with two kids meanwhile gets… nothing, pretty much. Weird or what? (They might qualify for help with specific needs like school costs; page 36 here gives examples of what really low-earners get by way of welfare. Essentially, the rich actually get bigger handouts.) This will probably be a less warped system by 2017.

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18 Responses to CY’s good news for ex-smugglers

  1. Bela Bronowski says:

    Disparity of wealth? But strict uniformity of vision.

    Why does life in Hong Kong remind me more and more of Paul Theroux’s story of cannibals and canvas shoes?

    Vanuatu cannibals found their first European victim and were intrigued to find that he wore canvas shoes. This must be the most succulent feature of the ‘long pig’ delicacy, they thought, so they threw away the body and started boiling the shoes. Feet you can remove. So special. But no one could eat them. They broke their teeth trying. And they took the shoes to another village but no one there could eat them either. So they dug a big hole, threw the canvas shoes in and buried them. They planted a coconut tree on top. The tree grew tall and when the storm came and knocked down the tree, they planted another.

    Surrounded by yams, coconuts, sweet potatoes and an ocean full of fish, there is nothing like the dream of the canvas shoe. Call them a Gucci handbag, a flat in Mid-levels, a career in the Civil Service or a share portfolio, Hong Kong knows all about…canvas shoes!

  2. Maugrim says:

    The police have known for some time about the Sheung Shui issue, in fact the Chief of Police gave a briefing about it in April. God knows why it took a protest to motivate the various arms of our disciplined services to take action. Perhaps this is a central point about HK, things only happen if…. As to poverty, there is also Chinese/non-Chinese divide. There are growing numbers of non-Chinese in receipt of CSSA payments and in possesion of public housing etc owing to having only one low income earning bread winner. The non-working partner is likely to have ‘home duties’. By comparison, it is likely that both parents in a low income Chinese family work, putting them in a slightly higher bracket and slightly out of reach of other subsidies available. The point being that they are slightly comparatively more disadvantaged by working. Non-Chinese low income families are also likely to have more kids, thus attracting greater subsidies. Either way, ‘poor’ people are getting assistance but as the article below shows, there are plenty playing the system:

  3. Sir Crispin says:

    I have found my next career move: Yakult breast enhancing rubber-inner.

    Zhang Ziyi and Gong Li look-a-likes only please. Fuglies need not apply.

  4. Vile says:

    Shouldn’t people with kids be in a higher tax bracket for the strain the seed of their loins put on public services and the damage they cause to public transport?

  5. Real Fax Paper says:

    Shouldn’t people without kids get less of a pension since the the seed of other people’s loins are paying for them? Demographics (not to mention unfunded state pensions around the world) innit?

  6. Meathamper says:

    Great news for Romney supporters in the city – if you still have money left over from your second (or third) apartment you’ll be able to pitch in for the presidential campaign, which so sorely needs your money to keep it afloat, much like the heartstrings-tugging poverty stricken regions of Africa.–election.html

  7. Bad Maths says:

    Sorry to interrupt the mouth frothing but the example given about the 60k child allowance is a bit misleading…

    It’s not 60k (per child) “taken off their annual salaries tax”, equalling 5k a month. It’s a 60k allowance taken off your taxable income. So, in the example of a 100k a month person, total income a year is 1.2m. Taxable income would be:
    1.2m – 60k (child allowance) = 1.14m * 15% ish

    Not including married/personal allowance of course.

    So the effect of this huge reduction is approx 9k a year, or $750 a month. On a 100k pm salary.

    Since the money isn’t ‘missing’ from the governments coffers, it doesn’t have to be made up from the other few hundred tax payers in this country…

  8. David Webb says:

    Glaring error in the article: the $60,000 is a deduction from salary income, not a deduction from tax. At the highest marginal tax rate of 17%, it is worth 17%*$60,000=$10,200 per year, or $850 per month, not $5,000 per month. The child allowance is fair because a parent has to pay for feeding, clothing and housing the child, and in some cases, paying towards its education. That child will eventually join the workforce and generate taxable GDP. The intent of personal allowances, child allowances etc is to approximate the reasonable outgoings so that individuals are taxed on their “profit”, not on their “revenue”. We do the same for businesses, and the result should be that everyone gets taxed on their share of GDP. For proposals to reform salaries tax to make if fairer and simpler, hit my link above.

  9. Vile says:

    Current taxpayers pay for retirees’ pensions? Yes, that story sounds familiar. Presumably this is why the few pensioners left over from the WWII fighting generation lived in such opulent publicly-funded luxury when the baby boom generation came of age. Oh, wait …

  10. Stephen says:


    But you live in Hong Kong hence rejoice our visionary government designed the MPF for us.

    After 12 fun packed years I believe my MPF account will afford me income for about one years retirement.

    I maintain the MPF is the biggest rip off fostered on the people of HK thus far – Do something CY Leung.

  11. Real Tax Payer says:

    Hemmers makes a good point : why on earth do the SZ Customs officials turn a blind eye to all these parallel traders with their back packs stuffed full of Iphones ?

    I must admit it’s a long time since I took the Lo Wo route to SZ, (which is bad enough in winter even just carrying a light suitcase, so it must be living hell on a hot summer’s day towing a trolley loaded to the hilt) But when I was forced to take that route in the past I always avoided to carry anything that would show up in the Customs’ X-ray machine because it was the strictest border crossing in China – at least for the foreign passport holders. Seems things have changed – or else the traders are paying bigger bribes…

    But here’s an interesting comment from Michael Chugani. I’m not a big fan of him, but sometimes he does really hit the nail on the head:


    Let’s give fake tourists same treatment as ‘dissidents’

    You have probably never heard of Wong Yin-sang before. But again, never mind. He’s a principal immigration officer. Public Eye is mentioning him only because of the ludicrous excuse he gave last week for his department having nailed just a tiny fraction of mainland parallel-goods traders, when thousands cross the border multiple times a day. Wong says it is impossible to prosecute them all because his department would have to gather proof that they came not as tourists but traders. But if he already knows those who enter multiple times a day are fake tourists, why let them in to start with? The Immigration Department regularly turns away so-called dissidents – such as June 4, 1989 student leader Wang Dan – without giving a reason. It simply says it does not comment on individual cases. If it can refuse Wang entry to join a peaceful candlelight vigil, why allow mainland traders to come here under false pretences and then try to prove they broke the law? Just shut the door as the department does to others deemed undesirable. If anyone asks, simply say it doesn’t comment on individual cases. Or is there one law for dissidents and another for mainland visitors?


    PS : I believe Yukult has other uses besides breast-enhancing : it seems it’s used also for strengthening teeth. I once saw a local guy buy a Yakult in 7-11, and instead of popping a straw through the metal foil top, he KNAWED his way through the base of the tough plastic bottle and sucked the yogurt drink out through the mangled hole he had created like a deranged vampire

  12. PropertyDeveloper says:

    NENT update (today’s SCMP). Perhaps CY will snatch defeat from the jaws of victory after all.

    A group of (mostly) illegal squatters have been told they can stay after all, in a cunning ruse to extract more compensation, following the goverment’s U-turn on the much-trumpeted (by Donald) private-public building plan aka jobs for the boys and flagrant collusion.

  13. Vile says:

    Oh, I treat MPF as just a top-up tax, not something you ever expect to see again. It’s amazing how managed funds always show fantastic year-on-year growth, but as soon as you’re forced to sign up to one the graph starts plunging the other way.

  14. Real Tax Payer says:

    @ Stephen

    Hear Hear !

    I’m due to retire soon and so I can finally get my greedy hands on my gilt-edge MPF CASH ! ( even though I and the company only put in the minimum each whatever that is : HK$1K each p.m ? )

    So I put in 12 years x HK$24K = HK$288K yes ?

    ….But that’s almost exactly what the MPF say they will give me next year !

    Well it’s enough to take a trip to Phuket

  15. Walter De Havilland says:

    Going off topic slightly … Carrie LAM is today claiming that the government was taken by surprise at the reaction to the NT housing development proposals. This is a stunning admission to make after the events of recent years. The Queens Pier and Wedding Card Street demolition sit-ins, the national education protests, the people volunteering their free time to clear up plastic pellets off the shoreline and demanding clean air … surely this gave the government some insight into the changing public mood. The government must be truly out of touch not to have seen this coming. Either this is willful blindness or incompetence.

  16. Stephen says:

    @ RTP

    Mine is less. In the last 12 years I was made redundant and amazingly companies can claim back mandatory severence pay against THEIR contibutions to MY MPF account. Mind numbing.

    Were we all fucking asleep when Tung fostered this con on ? And it still goes on and now they want even more $2,500!

  17. Real Tax Payer says:

    @ Stephen

    Yes I agree : this monster con trick is the worst of the lot

    It basically costs a company nothing to lay off an employee because, as you point out, the long- service pay can be offset against what the company has put into the MPF.

    Well, our company’s MPF service provider’s rep. is coming to our office in a week or so’s time to brief us on the new rules whereby staff can choose their own service providers ( guess he thinks he can con-vince us to stay with his company hahahahah!) Immediately this was announced one could hear the baying of a thousand jackals screaming for some real-live MPF rip-off artist to get their teeth into.

    We are hoping for a really hot day, then we will lock him in the conference room with no air -con for 2 hours before the blood fest begins….

  18. bk says:

    “A family on HK$15,000 a month with two kids meanwhile gets… nothing, pretty much. ”

    Nor do they contribute much tax towards the community, they receive subsidized housing/health/education which are funded by the $100k+ earners buying overpriced property.

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