The Hong Kong government's latest proposal to double the allowance for citizens aged 65 and above deserves our support. But the argument for the means test to determine who are eligible for the allowance doesn't seem to stand the test of logic.

The government's point, expounded by Matthew Cheung Kin-chung, secretary for labour and welfare, in the South China Morning Post, is based on affordability. Citing a host of figures to show expected expenditures under different scenarios, Cheung tries to persuade opponents to accept the assets test because of the need to keep recurrent expenditures under control when the population is rapidly aging.

With HK$2 trillion in fiscal reserves, Cheung's contention sounds rather hollow. The government's proposal may seem generous, but the increased allowance of HK$2,200 to each eligible senior citizen remains modest.

In debating the issue, it is important to bear in mind that we are talking about an "allowance", not a pension under any sort of retirement scheme. As an allowance, it should be seen as an appreciation for the contributions these senior citizens made to the society during their younger days, irrespective of their position or status.

Some commentators argued that without the informal declaration of assets, many of Hong Kong's wealthiest business tycoons will be entitled to the allowance. Of course, they do. But nobody would seriously believe that any of them would be standing in line every month to collect the money. As such, it's nothing but a silly point by those supporters of the assets declaration.

If you care to look carefully at the figures produced by Cheung, you'd come to the conclusion, as I did, that the several billion dollars of additional payouts without any declaration of assets shouldn't be large enough to present too much strain on the government budget. "If it (the old-age allowance) is available to all those aged 65 or above, the increase will be a hefty HK$13.6 billion (from HK$6.2 billion)," wrote Cheung. With the asset declaration as a barrier, the amount is estimated to be around HK$10 billion, or 22.7 percent of the budgeted expenditure on welfare services for fiscal 2013.

Although we take issue against the assets declaration, we have to support the government proposal simply because blocking its passage at the legislature would bring any progress in helping the needy, elderly people back to square one. Under this proposal, the neediest among the elderly will be entitled to higher benefits than before.

We hope this is only the first step. As money is of primary concern, the government must consider every option to increase revenue.

Tax increases are clearly not an option, because Hong Kong's traditional low and simple tax base is widely held to be an advantage its economy cannot do without. The government can boost its revenue by selling more land for development. But income from land sales depends on availability and market conditions which can change from year to year.

Recognizing the urgency of greater relief to the swelling ranks of elderly people in poverty, estimated to number more than 300,000, the government should try to diversify the tax base by introducing a consumption tax, with provisions to avoid penalizing the poor such as excluding foodstuffs. An earlier attempt to introduce such a tax was met with stiff public opposition. Perhaps the government should make a second try this time, when the need for increased revenue to pay for welfare services has become that much more pressing.

The author is a current affairs commentator.

(HK Edition 10/25/2012 page3)