My Take | Hong Kong’s finance chief learns to embrace deficit
- Deficit-financing every now and then is not such a bad thing when the government’s large fiscal reserves have been a source of social tensions
Besides that, there is a whole series of subsidies to individuals, families and companies, as well as low-income groups and public housing residents. If they all sound very familiar, that’s because they are.
It’s the kind of generous handouts the government likes to give out when it has an unexpected massive fiscal surplus. This time, though, we are in a recession, a political crisis and a possible pandemic. So, it seems that whether in good times or bad, this is all our government is capable of offering. It’s a one-trick pony.
Will the new measures buy some goodwill from a profoundly disgruntled and angry public? Probably not.
The offers tabled by Chan include: a full guarantee on loans taken out by companies to pay wages and taxes, subject to a ceiling of HK$2 million; rebates in salary and property tax, as well as other government fees and a month of lowered public housing rent; doubling monthly allowance for low income families on welfare; and waiving fees for public examinations to get into universities.
There will also be lower profit tax for companies, and subsidies for government rents, rates and utilities. But if there is any positive improvement, it’s not any particular policy or handout. Rather, it’s Chan’s willingness to accept a large deficit, so long as it’s not recurrent or structural, and to possibly dip into the HK$1.2 trillion fiscal reserves.