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Hong Kong Budget 2018-2019
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Financial chief Paul Chan Mo-po. Photo: Nora Tam

Middle-class families to get ‘massive’ tax breaks in Hong Kong budget

Source tells Post that finance chief will unveil incentives and relief measures to lessen burden on those struggling with housing and family expenses

Hongkongers will get no cash handouts in this year’s budget, despite mounting pressure from across the political spectrum on Financial Secretary Paul Chan Mo-po, who will instead offer “massive” tax incentives and relief measures targeting specific groups, especially the middle class.

Details will be unveiled on Wednesday when Chan announces his plan to spend a huge fiscal surplus that might surge well beyond HK$140 billion (US$17 billion), far above his official estimate a year ago. 

Expectations are high, as the first budget to be rolled out under the new administration is seen as a testimonial of the new fiscal philosophy of Chan and Chief Executive Carrie Lam Cheng Yuet-ngor.

“The whole thinking behind the budget is about sharing, how people can get a fair share from the big surplus,” a source familiar with the fiscal situation told the Post

Instead of lowering the standard salaries tax rate, which would benefit higher-income groups, it is understood Chan will announce substantial tax rebates to lessen the burden of middle-class families struggling to cope with housing and family expenses.
More than 65,000 households applied for a one-off living subsidy for low-income families in 2016. Photo: Martin Chan
Rather than handing out cash to everyone, as neighbouring Macau does every year, the Hong Kong government is set to dish out sweeteners, also known as relief measures, for more targeted needy groups. The value of the sweeteners could be as high as HK$40 billion if the administration continues its usual practice of spending a third of its surplus on “goodies” for the public. 

The Post reported earlier that the surplus had already exceeded HK$120 billion and would fall just below HK$160 billion as projected by some giant accounting firms.

The source added that more allowances would be granted to ensure the remaining 10 per cent of primary schools in the city would hire social workers to protect students from family abuse. 

The government is also expected to lower the first registration tax for private electric vehicles. 

Cash handouts for Hongkongers unlikely, finance chief says ahead of annual budget announcement

The financial secretary has emphasised previously that he would rather invest more in the city’s future and spend in areas such as innovation than give out money to everyone.

Apart from Macau, Singapore’s finance minister also announced on Monday that citizens over the age of 21 years would be given red packets of up to 300 Singapore dollars (US$227). 

More opposition politicians have weighed in to support the pro-establishment camp’s call for cash handouts.

The political pressure on the government comes against the backdrop of the Legislative Council by-election scheduled for next month.

Why are Hong Kong bureaucrats such misers when it comes to spending on needed services?

About 2.1 million Hong Kong voters, nearly half of whom are from the New Territories East constituency, will elect four legislators on March 11. They will fill four Legco seats vacated by opposition lawmakers who were disqualified for failing to take their oath of office properly in 2016.

“We still agree the government should invest in long-term planning,” said Democratic Party chairman Wu Chi-wai, who argued cash handouts could be a more efficient way to reach out to the needy. 

“But if the administration has already set aside around HK$40 billion to HK$50 billion for relief measures, why not return this sum of money to the citizens through cash handouts instead?”

Wu said “N-nothing” families – referring to those who are eligible for neither subsidised housing nor welfare assistance – had been left out in previous budgets, and cash handouts would give them a boost.

Hong Kong government urged to allocate extra HK$7 billion for mental health services

Sze Lai-san of the Society for Community Organisation warned that more than 40,000 N-nothing households would suffer without cash handouts. 

More than 65,000 households applied for a one-off living subsidy for low-income families back in 2016 but the programme, which lasted for three years, was cancelled last year. 

Although another programme offering a monthly subsidy to low-income working families has been in place since May 2016, Sze said it had so many restrictions that only about 18,000 households living in subdivided flats had applied for it.

“It means there are more than 40,000 poor families struggling with high rents and are out of the safety net,” she said.

Yan Nga-chi and her daughter Wong Zi-Wei, 4, in their flat in Sham Shui Po. Photo: Dickson Lee

Yan Nga-chi, a single mother who had applied for the N-nothing subsidy back in 2016, was hopeful that Chan would deliver cash so that she could have her monthly rent waived for once.

“My rental contract will be renewed in May and I’m afraid the new rent will go up from the current HK$6,900,” said Yan, whose earns about HK$10,000 per month.

“I also hope the government will build more public flats so that we can move into a cheaper unit.”

A spokesman for the financial secretary said the government had noted such concerns and would address them in a holistic manner.

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