Handouts Halved In Latest Budget, Loans Offered

The Financial Secretary Paul Chan handed out fewer sweeteners in his latest budget blueprint delivered on Wednesday, offering up HK$5,000 worth of electronic spending vouchers, tax breaks of up to HK$10,000, along with a variety of other measures to help individuals and businesses.

As expected, with Hong Kong notching up a record budget deficit of HK$258 billion, Chan did not repeat last year’s HK$10,000 cash handout to all adult residents, offering instead HK$5,000 worth of ‘electronic consumption vouchers’ to everyone aged 18 or above to encourage spending, along with a fully-guaranteed loan scheme for the unemployed.

He said the vouchers would be handed out in installments to all residents and new arrivals over the age of 18.

Speaking at a press conference on Wednesday afternoon, Chan said one option is to hand out the sum in five installments of HK$1,000, and people would be required to spend each installment within a specific period of time.

He said the government found from overseas examples that electronic vouchers with an expiry date are most effective in boosting domestic consumption.

People can spend the vouchers on online shopping as well, but not from overseas merchants, Chan said.

“We hope the scope could be as wide as possible so long as it is to be incurred in domestic consumption,” he said, adding the government is looking to partner with ‘stored value facilities operators’ to implement the scheme, with Octopus being “one of [the] obvious choices”.

Chan said the elderly who are not familiar with electronic payments could ask relatives for help.

The finance chief also said salaries tax will be waived for the coming year, capped at HK$10,000 – down from HK$20,000 in the previous year.

Chan said the 1.87 million people will benefit from the scheme.

He also announced a HK$1,000 subsidy for electricity bills, while property owners will get rates concessions worth up to HK$5,000 for the year.

And the handouts to the needy were also halved, with people getting an extra half a month’s worth of welfare, old-age, and disability allowances, instead of a full month as before.

Those receiving the government’s Working Family Allowance and Work Incentive Transport subsidy will also get an extra half-month’s payment.

With Hong Kong’s unemployment rate at a near-record high of seven percent, Chan said people who've lost their jobs won’t be given direct handouts, but instead be given access to low-interest loans of up to HK$80,000 that are fully guaranteed by the government.

The maximum loan amount is set at six times the applicant’s last monthly salary, while only 1 percent annual interest will be charged over five years.

Successful applicants would only have to repay interest in the first year, with the principal to be repaid over a maximum of four years.

Those who repay the loans in full on schedule will be reimbursed for all the interest they paid.

Freelancers who can provide proof that they’ve lost income can also apply for the loans – with the government promising to cover up to HK$15 billion as part of the scheme.

Businesses, meanwhile, will also see a maximum tax concession of HK$10,000 in profit tax, along with rates concessions, registration fee waivers, and a discount on water and sewage charges.

A low-interest loan scheme will also be extended, and companies can borrow up to 18 months’ worth of staff wages and rent, up to a maximum of HK$6 million.

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