Businessmen, not the government, should help

Businessmen, not the government, should help

I recently heard that former Liberal Party leader James Tien Pei-chun has been trying to persuade the government to set aside a small part of its foreign exchange (forex) reserves as financial aid for poor communities.

Based on the principles of capitalism, some rich people think they have already paid taxes to the government for social needs, and the government should shoulder more of this social obligation. But should the government use its reserves to help the poor?

A government needs forex reserves to co-ordinate trade policy and improve the domestic economy. The reserves generally include large proportions of foreign banknotes and sovereign debt. A government builds forex reserves to fulfil its financial obligations and make official payments to other countries.

However, if the government uses its reserves to help the poor, the funds will lose their original purpose. We should not forget that it was our abundant reserves that helped us overcome the enormous destruction of the 1997 financial crisis. They allowed our economy to recover at a reasonable pace and this is exactly what the reserves are for. The reason why Tien, a businessman, asked the government to provide financial aid by allocating forex reserves is because he thinks that it is unfair for the rich to pay more taxes to help the poor.

Yet, compared with other developed countries, our tax rate is comparatively low, which means that businessmen already benefit from our low-tax business environment. Rich businessmen should not ask the government to use its reserves to help the poor. Instead, they should contribute more to society by helping poor communities, which at the same time, would lessen the wide gap between the rich and the poor.

All in all, businessmen have made a lot of profits through our favourable business environment, and morally they have the responsibility to give back to society. The government should maintain its policy of not using its forex reserves to help the poor.

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