Hong Kong caves to pressure and offers handouts for all

Mar 2, 2011, 8:08 GMT

Hong Kong - Hong Kong's finance chief on Wednesday bowed to pressure over his recent unpopular budget by promising a handout of 6,000 Hong Kong dollars (770 US dollars) to each adult resident.

The move, which followed protests over the budget announced a week ago, replaced a proposal to inject the same amount of cash into workers' pension schemes.

Financial Secretary John Tsang also announced salary tax reductions of up to 75 per cent for the coming year, capped at 6,000 Hong Kong dollars.

Tsang had earlier said he would not consider tax rebates or cash handouts as these might fuel inflation, already predicted to reach 4.5 per cent this year, up from 2.4 per cent in 2010.

He came under fierce criticism from lawmakers from all political parties over his budget, which included a 2.36-billion-US-dollar package of one-off relief measures.

Critics said the measures, especially the pension scheme injection, did little to help the poor and middle classes and several lawmakers threatened to vote against it when it comes before the Legislative Council for approval in April.

Announcing the revised budget Wednesday, Tsang said the handout would not be given directly to people but allocated under a new system that would encourage people to save the money rather than withdraw and spend it.

'We have heard many noises that they [the public] found some of the measures unacceptable,' Tsang said. 'Given what I have heard and the discussions I have had with members of the legislature, we have decided to make this decision.'

However, the new plan was also greeted with criticism with the Civic Party's Ronny Tong calling it a short-sighted ploy to placate public anger.

The Democratic Party's Albert Ho said the financial secretary's U-turn had failed to address public concern and had also put him in an embarrassing situation and undermined his authority.

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