Hong Kong is eerily quiet this evening. Rush hour traffic was heavy, but not too bad and as I got home from the gym, there was hardly anyone on the streets.
Where did everyone go?
Perhaps the city is preparing to brace itself when it hears Financial Secretary John Tsang Chun-wah's budget speech tomorrow afternoon.
In the past months and weeks we have heard of more banks laying off staff, restaurants and supermarkets raising the prices of food, and while rents and property prices are softening, it's only slightly.
Some media are speculating Tsang will hand out as much as HK$40.3 billion ($5.2 billion) in terms of tax rebates, utility subsidies and property rate waivers. He will also announce the sale of at least HK$10 billion in inflation-linked bonds.
Last week Chief Executive Donald Tsang Yam-kuen admitted at the World Economic Forum at Davos that he has "never been as scared" about the global economic outlook. UBS AG is forecasting Hong Kong will experience a "shallow" recession in the first half of the year.
"Much of the ammunition is likely to be spent on countering economic hardship stemming from slowing growth and the widening income gap," said Kelvin Lau, an economist with Standard Chartered Plc in Hong Kong. "We expect the upcoming budget to be long on one-off concessions and short on new vision."
That was most certainly the case last year when John Tsang originally wanted to put HK$6,000 into every person's MPF or Mandatory Provident Fund for retirement and the huge public uproar forced him to hand out cash to every permanent Hong Kong resident living here and abroad. The mishandling of the incident cost hundreds of millions of dollars in terms of setting up the infrastructure and logistics of distributing the money.
Given Tsang's track record people are probably not expecting him to come up with any brilliant ideas for the long term. So they probably anxiously waiting to see what short-term stop-gaps he will come up with.
In the meantime a group is proposing that those who buy luxury goods should be taxed 3 percent.
This was the conclusion after a survey of 200 Hong Kong-based members of CPA Australia, a global accounting organization.
Loretta Shuen Leung Lai-sheung, chairwoman of the Greater China tax division of CPA Australia, said the proposed tax on luxury goods would not deter mainland shoppers in the city. That's because designer brands are taxed 30 to 50 percent for being imported and 17 percent for value-added tax on the mainland.
"This is a far cry from the levy across the border," Shuen said yesterday. "Another reason they [mainlanders] shop here is because of the authenticity and high quality of goods."
In 2010 the sales of luxury goods reached HK$50 billion; a tax of 3 percent would yield HK$1.5 billion in revenue for the government, she added.
Shuen said it was time the government look for long-term measures to widen the tax base because only one in five people in Hong Kong paid taxes in 2010, mostly coming from the middle class.
However some are concerned about the definition of luxury goods and who should be taxed.
"There are many issues needing to be addressed," said Yvonne Law Shing Mo-han, Deloitte's national chief knowledge officer. "For example, should we tax tourists or local shoppers or both? Should we tax local brands or foreign brands?" Law asked. "A plasma TV is a necessity to many families, but it may cost tens of thousands of dollars. A branded handbag is a necessity to many ladies, but it may be a luxury to others. How should be define luxury goods?"
While Shuen has the right idea, Law has a bizarre concept of what luxury goods are.
Financial gurus who try to help people manage their money boil it down to this -- a want and a need.
We can all probably agree that a high-end television that costs tens of thousands of dollars is not a necessity but a want.
A designer handbag that costs a few thousand dollars is probably a want than a need.
Sounds pretty straight forward to me. And what's wrong with taxing both tourists and locals? If they can afford it, surely they would have no qualms paying 3 percent more.
As the saying goes, if you have to ask the price, you can't afford it.