Hong Kong’s government plans to reduce taxes, increase welfare spending and support tourism-
related businesses after economic growth slowed last year.
Measures announced in its budget include reducing personal tax by as much as HK$20,000 (US$2,580) this fiscal year, providing extra allowances for the poor and elderly, and waiving some fees for the tourism industry, the government said.
Photo: AFP
Rival financial center Singapore this week also announced plans to strengthen social security support for older workers.
In Hong Kong, the government faces the additional challenge of trying to restore confidence after pro-democracy protests froze parts of the territory late last year and push through legislation to reform the leadership election in 2017 that sparked the demonstrations.
“The government is still relying too much on the one-off, ad hoc relief measures,” Australia and New Zealand Banking Group (ANZ) Hong Kong-based analyst Raymond Yeung (楊宇霆) said.
The government said it would waive license fees for some travel agents, hotels and restaurants for six months, as well as allocate additional spending to promote Hong Kong to international investors and tourists.
“We need to rebuild international investors’ and tourists’ confidence in Hong Kong, and uplift our international image,” the government said.
Last month, the Hong Kong Tourism Board started a new round of publicity in Japan, South Korea, Southeast Asia and major mainland China cities, according to the budget document.
“The Occupy movement affected tourism, hotel, catering, retail and transport industries,” the government said yesterday. “Prolonged political bickering is detrimental to public administration and the international image of Hong Kong as a stable, law-abiding and efficient city.”
Some industries would benefit from the one-time measures, Nomura Holdings Inc Hong-Kong based economist Kwon Young-sun said in a telephone interview.
“The Hong Kong government is moving in the right direction,” he said. “This one-off relief will help some of the sectors negatively affected by recent political unrest.”
Economic growth slowed to 2.3 percent last year, and moderated to 0.4 percent in the fourth quarter from the preceding three months.
For this year, the government forecast economic growth of between 1 percent and 3 percent. The labor market is forecast to remain stable, while imported inflation “will remain mild.”
The government also plans to establish a Future Fund for long-term savings later this year, with an initial HK$220 billion.
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