FEB. 25, 2015
Pro-democracy demonstrators in the Mongkok district of Hong Kong last October. Credit Xaume Olleros/Agence France-Presse — Getty Images
HONG KONG — Two months after protesters were cleared from the streets, the Hong Kong government announced on Wednesday a budget full of tax breaks and other handouts to provide economic support to the lower and middle classes, and to businesses it said had been disrupted by 11 weeks of demonstrations.
“The Occupy movement affected tourism, hotel, catering, retail and transport industries,” John Tsang, the city’s financial secretary, said in his budget speech, adding that the initiatives would help “offset the impact on economic confidence.”
Hong Kong’s widening wealth gap and increasingly unaffordable housing emerged as catalysts for last year’s democracy protests, and Mr. Tsang offered several measures intended to help address those issues.
He announced one-time items that included tax breaks on salaries and profits; increased financing for small and medium-size companies; increased welfare payments for the poor and seniors; and a one-month rent waiver for low-income tenants of public housing.
He also increased the permitted tax deduction for raising children, a recurrent measure, and estimated the cost of all these handouts at 34 billion Hong Kong dollars, or $4.4 billion.
Mr. Tsang also announced measures worth 290 million Hong Kong dollars that he said were intended to help Hong Kong recover from the effects of the Occupy protests.
Those included license fee waivers for travel agents, hotels, restaurants and taxis and buses, as well as increased spending to promote Hong Kong as a travel destination.
Mr. Tsang noted that tourist arrivals to Hong Kong had increased 12 percent last year, while their total spending rose 9 percent, to more than 350 billion Hong Kong dollars. In October, at the height of the protests, arrivals from mainland China, Hong Kong’s biggest source of tourists, rose 18 percent, according to figures from the tourism board.
The risk to the measures announced on Wednesday and other large government spending programs, like fiscal initiatives to help a rapidly aging population, is that public opposition after the Occupy protests could hamstring the government.
“Is the government still going to have the basic consent among the population to draw up and implement economic policies — tackling the aging issue or getting infrastructure done, for example?” said Andrew Colquhoun, head of Asia-Pacific sovereign ratings at Fitch Ratings in Hong Kong. “That’s still an open question, whether that political constraint becomes more binding for them.”
Mr. Tsang suggested that this might be the case, expressing frustration with the pace of funding approvals from the local legislature, the Legislative Council, also known as LegCo, which features a minority of directly elected members who favor democracy and supported the protests.
“With a number of projects entering their construction peaks, capital works expenditure is expected to maintain at relatively high levels in the next few years,” Mr. Tsang said. “We are, however, concerned about the sluggish progress of deliberation in LegCo since the last session. This has resulted in the mounting of backlog of funding proposals.”
