November 10, 2023
HONG KONG – The Hong Kong Special Administrative Region government has thumbed down two proposed financial incentives to encourage childbearing, pointing out that it has already provided a host of measures to reverse the decline in the city’s fertility rate.
Answering a query at the Legislative Council on Wednesday, Deputy Chief Secretary for Administration Cheuk Wing-hing rejected proposals to provide an annual cash bonus of HK$40,000 ($5,117) to each newborn baby in grassroots communities until the baby reaches the age of 5 to 6 and to introduce a tax deduction for expenses in employing foreign domestic helpers.
Cheuk said the proposed annual cash bonus for babies from grassroots communities would mean disbursing a total of HK$200,000 to HK$240,000 for each baby.
“A preliminary estimate of the expenditure incurred by the proposal is that it would reach tens of billions of dollars. This is a colossal financial burden and not a good use of resources either,” Cheuk said.
He rejected the proposed tax deduction for employing FDHs, adding that it is essential for the government to carefully scrutinize the impact of the proposals like this on public finance.
ALSO READ: Data: HK’s fertility rate declined over past 30 yrs
“The ultimate objective is to strike a balance between reducing taxpayers’ tax burden and maintaining healthy public finance,” Cheuk said.
Hong Kong’s total fertility rate dropped to a record low of of 0.7 in 2022, with the proportion of elderly persons aged 65 and above expected to increase from 20 percent of the city’s population to nearly one-third in ten years’ time.
Cheuk said that Chief Executive John Lee Ka-chiu had already announced in his 2023 Policy Address an array of measures to promote fertility by adopting a “combination punches” approach, including a HK$20,000 cash bonus to eligible parents for each baby born in Hong Kong on or after Oct 25, 2023.
ALSO READ: HK’s population estimated at 7.33 million at end-2022
He said government will also set aside a quota for families with newborns to ballot for Subsidized Sale Flats, give them priority in flat selection, and reduce their waiting time for public housing.
Starting from the year of assessment 2023/24, the basic child allowance and the additional child allowance for each child born during the year of assessment have been raised from HK$120,000 to HK$130,000, Cheuk said.
To support families with newborn children, the chief executive also proposed that, starting from the year of assessment 2024/25, the deduction ceiling for home loan interest or domestic rents will be raised from HK$100,000 to HK$120,000 for taxpayers who live with their first child born on or after Oct 25 this year until the child reaches the age of 18.
READ MORE: Hong Kong’s population drops
“We hope that these measures coupled with enhancement of child care support and increase in tax concessions would help make young families to positively consider adding new members to their families,” Cheuk said.