Hypocrisy dwells in a housing scandal

SCMP January 8 2007



For hypocrisy, the senior bureaucracy and the judiciary excel. Spare a thought for former music academic Chan Wing-wah, sentenced to community service and condemned for "greed" by a judge who is in a position to enjoy income advantages similar to those for which he condemned Chan. Indeed, instead of expressing outrage at Chan, members of the judiciary should be asking why they, among others, are granted outrageous tax breaks that suddenly become "illegal" when an irrelevant, fine line is crossed.

Chan's crime was to "cheat" Chinese University, where he was an associate dean of the arts faculty, out of HK$1.9 million by claiming a rental allowance while occupying a flat in which he had a partial interest. This was in contravention of a rule that allowances could not be claimed on properties in which a claimant or relative had an interest.

Chan was certainly either stupid or ignorant. If he had had any sense he would - like 90 per cent of the senior bureaucrats, judges and academics who qualify for housing allowances - have leased his own flat to a third party and rented a nearby flat at a similar rent. Chan was entitled to a housing allowance. The "cheating" part is mere cover for the bureaucracy's attempt to obscure its own greed by pretending that allowances should not go to those owning their own flats.

The question that should be asked of every judge, senior bureaucrat and senior academic in receipt of a housing allowance is this: how many flats in Hong Kong do you own? If any, why should you be entitled to a housing allowance?

The existence of these housing allowances also highlights another - the chief beneficiaries of which are these self-same senior bureaucrats, judges and academics. When an employee is reimbursed by his employer for housing costs, this payment is judged for tax purposes to represent only 10 per cent of that person's income. In most cases that is an absurd fiction. In practice, rental allowances run at 30 to 50 per cent of salaries. The same principle applies to quarters provided directly by the employer. In the case of the government, this amounts to tens of thousands of people. While many are middle- and lower-income people like policemen - for whom there is little or no tax benefit - there are huge benefits for the already overpaid, upper-echelon civil servants.

If Financial Secretary Henry Tang Ying-yen were really serious about broadening the tax base, he would start by ending the system whereby big benefits in kind - principally housing - are taxed at derisory rates, if at all. But of course his fat-cat bureaucrats would resist.

This incident also points out how much time the Independent Commission Against Corruption wastes on petty cases. Chan's "offence" dates back 16 years, and he repaid the university in 1996. Putting so much effort into marginal cases helps explain why the ICAC has almost zero success in tackling big-money corruption involving the public sector, particularly relating to land and buildings. This is not surprising now that the ICAC is headed by civil servants still anxious for promotion in a system that is highly self-protective, and has ever-closer links with local cartels.

The Chan episode is also a reminder of the cavalier way in which the leadership disposes of public assets. When he was chief executive, Tung Chee-hwa did not deign to stay at Government House, preferring his own apartment. But now that he has no official function, he is being provided with the entire, historic Kennedy Road colonial building as his office.

One can forgive his blundering as chief executive. But does he have no shame, no sense of propriety? Perhaps the current chief executive could tell us the assessed rent for this building, and whether its use will be included in Mr Tung's next tax return.

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