Bigger cash bonuses to boost Hong Kong’s birth rate will drain public coffers, official says after rejecting call for HK$40,000 annual handout

Deputy Chief Secretary Warner Cheuk turns down lawmaker’s call for five-year handout for low-income families with newborns and higher child tax allowance

‘The proposal will generate tens of billions in expenditure for the government, which is not a good use of public resources, and authorities have no plan to adopt it,’ he says

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A Hong Kong official has reject lawmakers’ calls to give some families with newborns a five-year HK$40,000 annual handout. Photo: Xiaomei Chen

Published: 3:52pm, 8 Nov 2023Updated: 7:41pm, 8 Nov 2023

Introducing more generous cash incentives to encourage couples to have children and counter Hong Kong’s flagging birth rate will strain public coffers, a senior official has said after rejecting calls to give some families with newborns a HK$40,000 (US$5,100) annual handout for the first five years of the child’s life.

The number of births dropped from 52,900 in 2019 to 43,000 in 2020, and then from 37,000 in 2021 to 32,500 in 2022, an almost 40 per cent decline over the entire time period.

Legislator Peter Shiu Ka-fai on Wednesday was among those calling for more substantial cash bonuses and suggested giving low-income families HK$40,000 per year for each newborn until the child turned five.

Deputy Chief Secretary Warner Cheuk says authorities must avoid draining public coffers through cash incentives and tax allowances to boost the birth rate. Photo: Jonathan Wong

But Deputy Chief Secretary Warner Cheuk Wing-hing turned down the policy suggestion, saying: “The proposal will generate tens of billions in expenditure for the government, which is not a good use of public resources, and authorities have no plan to adopt it.”

Selectively applying the policy would take up further government resources and generate a “huge amount of administrative cost”, he added.

Cheuk also shot down Shiu’s suggestion to encourage middle-income households to have more children through tax allowances of HK$150,000, HK$300,000 and HK$600,000 for the first, second and third child, respectively.

“The government must consider the impact of the tax allowance proposal on public finances, and whether it is in line with the principle of simple and fair taxation, to strike a balance between maintaining fiscal health and reducing the burden on taxpayers,” Cheuk said.

The city official also said the suggested child tax allowance would reduce the government’s annual income by HK$4.2 billion, representing 5 per cent of the revenue gathered from salaries tax and personal assessments.