Hong Kong gov’t rejects lawmaker’s proposal to increase baby bonus for low-income families
Hong Kong Free Press
The Hong Kong government has rejected a lawmaker’s proposal to increase the amount of cash given for babies born to low-income families and to enhance measures for tax breaks, calling the suggestion a “colossal financial burden.”
Shiu Ka-fai, chair of the pro-Beijing Liberal Party, asked in the Legislation Council (Legco) on Wednesday if authorities would consider disbursing an annual cash bonus of HK$40,000 to low-income parents with babies, until the child reached the age of five or six.
Hong Kong has one of the lowest birth rates in the world. To try and address this, the city’s leader John Lee rolled out a series of measures during his second Policy Address in October, including tax breaks, a HK$20,000 bonus to new parents who are permanent residents, and a reduction in the wait for public housing for families with newborns.
In response to Shiu’s suggestion, Warner Cheuk, deputy chief secretary for administration, said in Cantonese that the proposal would see each baby receiving HK$200,000 to HK$240,000, which would cost the government up to HK$65 billion according to preliminary estimates.
“This is a colossal financial burden and not a good use of resources either,” Cheuk said, adding that the government had no plan to adopt the proposal.
In addition, Shiu asked if the government will raise child allowances to HK$150,000, HK$300,000 and HK$600,000 for a family’s first, second, and third child, respectively.
He also suggested introducing tax deductions to employers of migrant domestic workers, a move Shiu said would help alleviate the cost of child care and release women into the labour force.
Cheuk turned down both proposals, saying the first would result in reduced government revenue of around HK$4.2 billion per year.
The official added that some tax breaks had already been introduced to boost birth rate during policy address, including raising the deduction ceiling for home loan interests or domestic rents from the current HK$100,000 to HK$120,000.
Regarding the proposal linked to domestic workers, Cheuk said it was imperative to “carefully scrutinise” the impact of any new tax deductions.
Fiscal deficit
Hong Kong has seen consecutive years of deficit since the financial year ending in March 2020.
Paul Chan, the city’s financial secretary, said in late October that the government may face a deficit of more than HK$100 billion for the current fiscal year. Chan previously forecast a shortfall of HK$54.4 billion during his February budget, which would have left fiscal reserves at HK$762.9 billion.
Chan attributed the shortfall to weak land sales, totalling only HK$10 billion during the 2023-24 financial year thus far.
According to Chan’s budget announced in February, the Hong Kong government expected to record a deficit of HK$140 billion for the previous financial year, which ended on March 31.
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