Twinnie Siu, Donny Kwak

HONG KONG, (Reuters) –Hong Kong will provide tax reliefs, subsidies, and handouts to residents and small businesses to offset the effects of a new wave social restrictions that curb COVID-19 infection, Paul Chan, Finance Secretary, stated in his budget speech 2022/23.

These measures came as small retailers, bars, and restaurants across the country warned of imminent closures.

Chan stated via videoconference that “our economy and people’s livelihoods are under tremendous pressure in the recent months,” to legislators on Wednesday. “Economic performance for the first quarter of this year is not positive.”

Chan claimed that the “countercyclical” budget was larger than HK$170 billion (21.79 Billion), while spending on anti-epidemics is more than HK$54B.

The “dynamic zero COVID” strategy of the global financial centre has been doubled. It aims to eliminate all virus outbreaks.

Analysts predict that the city will experience a significant increase in infections, with thousands being reported each day.

The following venues cannot be opened after hours: bars, salons, beauty parlours, and twelve other kinds of places. Restaurants are also closed. The majority of shops are empty, with the exception of grocery stores. Residents are returning to their homes and working remotely. According to the finance industry, this is causing a massive exodus of talents and making it difficult to manage a regional hub from Hong Kong.

These restrictions, which are among the most severe yet implemented by authorities, are likely to continue until at least April 20.

Budget measures were announced Wednesday. They include a reduction of 100% in the salaries tax (capped at HK$10,000), handouts worth HK$10,000 for consumption, financial aid to the unemployed and subsidy for directly impacted companies.

The tax deductions will apply to rent payments as well as subsidy for transportation and utilities.

Chan indicated that 151,000 businesses will be benefited by a 100% cut in profits taxes, with HK$10,000 as a cap. The government will also help small businesses with export financing and loan guarantees.

Hong Kong’s economy should grow by 2.0% to 3.5% next year. It grew 6.4% in 2020, Chan indicated. Chan added that this forecast also takes into consideration a possible recovery in the second half of 2021 once the outbreak is under control.

Chan declared, “Successful elimination of the epidemic is key to the safeguarding of our economy as well as people’s lives.”

($1=7.8028 Hong Kong dollars)