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HK expected to unveil Budget relief measures worth US$4.3b

The package is scaled down from the previous year, with the government likely to table a smaller budget surplus of around US$1.3 billion.

HONG KONG: Hong Kong is expected to unveil relief measures worth around US$4.3 billion in its Budget on Wednesday.

The package is scaled down from the previous year, with the government likely to table a smaller budget surplus of around US$1.3 billion.

Government coffers have been hit by lower income from property transactions and from higher welfare spending.

Many of Hong Kong's growing middle-class feel they were neglected in last month's policy address by Chief Executive Leung Chun-ying.

They believe the Budget may not bring the relief they're looking for.

Others think the 'double-stamp duty' to cool property prices is likely to remain.

Financial Secretary John Tsang has hinted that one-off relief measures dished out last year will be withdrawn or reduced. They include income tax breaks, and relief on property rents and rates.

Analysts believe Mr Tsang will warn about the rise in public expenditure as education, healthcare and social welfare make up the bulk of this.

A recent government-commissioned survey found the SAR could face a structural deficit in 10 years' time, and the city's reserves could be depleted in 20 years if Hong Kong keeps spending at the current rate.

Ms Jennifer Wong, Tax Partner at KPMG, said: "The problem is something that we have not encountered before because we're talking about the aging population.

"We suggest the government take measures to induce employment (among) the retirees, the working mums, encourage the government to hire youngsters and disabled persons."

Mr Tsang may be taking a page or two from Singapore's playbook. In his latest blog, he said the city could learn from Singapore's success in importing more labour and reclaimed land to boost economic growth.

Small and medium-sized enterprises are hoping for incentives to encourage upcoming sectors like childcare and education, healthcare and mobile applications.

And possibly the setting-up of an SME zone, with rental subsidies and lower tax rates for start-ups.

Mr Dariusz Kowalczyk, senior economist at Credit Agricole, said: "The city could do more in other areas, outside of finance, both in the services sector and perhaps looking at what Singapore has done. Singapore managed to expand manufacturing despite it being a small market on its own, surrounded by countries with much lower labour force, and yet the government of Singapore has been amazingly successful."

Hong Kong has been pursuing an expansionary fiscal policy following the global financial crisis in 2008. Since then, the administration has spent more than US$25 billion on relief measures. 

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