Hong Kong’s Financial Secretary Paul Chan Mo-po has unveiled a spending blueprint with fewer but more targeted relief measures, including an unprecedented digital voucher scheme for residents to spur consumption.
The relief measures, which include a HK$10,000 cash payout to all Hong Kong permanent residents aged 18 or above, will substantially contribute to the government’s 2020-21 deficit, estimated at HK$139.1 billion, or 4.8 percent of GDP. Details on the much-anticipated cash pay-out scheme are yet to be announced.
In two other unprecedented initiatives, every adult permanent resident will be given HK$5,000 (US$645) in vouchers to spend domestically, while jobless Hongkongers will be offered a one-off, virtually interest-free personal loan of up to HK$80,000.
Chan also announced that Hong Kong’s economy shrunk by 6.1 per cent in 2020-21 – the largest economic decline on record.
“With the epidemic still lingering, our economy is yet to come out of recession,” Chan said in his budget address on Wednesday. “Our most urgent task is to contain the epidemic and press ahead with the vaccination programme, so that people and businesses can be back on track.”
Similar with previous years, relief measures include rebates and waivers. There are no changes to tax rates or bandings, with the usual rebates for income tax. Chan also reiterated the government’s continuing support for various sectors including tourism, shipping and asset management.
In addition to strengthening its role in the Greater Bay Area development, the city would actively pursue joining the Regional Comprehensive Economic Partnership, a trade alliance of 15 Asia-Pacific nations, Chan said.
With unemployment at a 17-year high of 7 percent, Chan allocated another HK$6.6 billion to create about 30,000 jobs that would last for up to 12 months, following up on a similar scheme rolled out last year.
To raise revenues, the government would increase the stamp duty levied on stock trading to 0.13 per cent from the existing 0.1 per cent. This means each buyer and seller of a stock would be subject to a small levy. The government forecasts the measure will bring in HK$12 billion in revenue during its first year of operation.