2021-2022 Budget Speech Highlights

The 2021-22 Budget has been delivered yesterday (24 February 2021) by Financial Secretary, Mr. Paul Chan. It was announced that the Hong Kong economy shrunk by 6.1% in 2020, and is expected to grow by 3.5% – 5.5% in 2021-22.

With ongoing epidemy, the economy has not come out of recession yet. Despite this, the Financial Secretary delivered optimistic outlook for the economy on the upcoming years. Government current primary focus is to contain the epidemy, and proceed with the vaccination to stimulate the recovery.

1. Support Enterprises and Employment

  • Extend the application period of 100% guarantee low-interest loan until the end of this year, raise the ceiling to $6 million & extend repayment period and duration of principal grace period.
  • Reduce profits tax for 2020-21 assessment, subject to ceiling of $10,000.
  • Provide rates concession for non-domestic properties in 2021-22, subject to ceiling of $5,000 / quarter in first two quarters & $2,000 / quarter in remaining two quarters.
  • Waive business registration fees for 2021-22.
  • Waive 75% of water and sewage charges of non-domestic households for 8 months, subject to monthly ceiling of $20,000 and $12,500 respectively.
  • Grant 75% rental concession for eligible Government properties / short-term tenancies and waivers for 6 months.

2. Relieve People’s Hardship

  • Set up a Special 100% Loan Guarantee for Individuals.
  • Reduce salaries tax and tax under personal assessment for 2020-21 assessment, subject to ceiling of $10,000.
  • Provide rates concession for domestic properties in 2021-22, subject to ceiling of $1,500 / quarter in first two quarters & $1,000 / quarter in remaining two quarters.
  • Subsidy of $1,000 to each residential electricity account.
  • Pay examination fees for school candidates sitting for 2022 HKDSE Exam

3. Revive the Economy

  • Electronic Consumption Vouchers, issue $5,000 electronic consumption vouchers in installments to each eligible HK permanent resident and new arrival aged 18 or above.
  • Inject $1.5 billion into the Dedicated Fund on Branding, Upgrading, and Domestic Sales, increase ceiling per enterprise to $6 million.
  • Provide electronic submission means for most government forms and licenses applications by mid-2022.
  • Explore the development of the Hong Kong Legal Cloud.

4. Stimulate the Economy

  • Issue >$24 billion Silver Bond and >$15 billion iBond in 2021-22, and lower the eligible age for Silver Bond from 65 to 60.
  • Issue green bonds of $175.5 billion within the next 5 years, with plan to issue retail green bonds.
  • Provide subsidy for Real Estate Investment Trusts to list in Hong Kong.
  • Provide subsidy for open-ended Fund Companies to set up in or re-domicile to Hong Kong.
  • Inject $9.5 billion into the Innovation and Technology Fund.
  • Continue to support the development of 5G networks and applications.

5. Land and Housing

  • Potential land supply of 2021-22 Land Sale Programme, expected to provide about 16,500 units.
  • New developments area projects under planning, expected to provide a total of over 860 hectares of brownfield sites in New Territories which can be redeveloped for housing and other uses.
  • Examine the feasibility of rezoning 5 commercial sites in Kowloon East for residential use, expected to provide about 5,800 private housing units.
  • Estimated production of 101,400 housing units within 5 years period, comprising of over 70,000 public rental housing and 30,000 subsidised units.
  • Estimated average annual production of 18,000 private housing units within 5 years period.

6. Building a Liveable City

  • Complete updated Clean Air Plan for Hong Kong by Mid-2021.
  • Earmark $150 million to conduct energy audits and install energy saving appliances, free-of-charge for social welfare NGOs.
  • Inject $1 billion to Recycling Fund and extend the application to 2027.
  • Increase the rates of each tax band for the first registration for private cars by 15%, and the vehicle license fee by 30%.
  • Allocate $147 million to enhance mental health services.
  • Provide about 8,800 residential care places and about 2,800 subsidised day care service places in the coming few years.

7. Public Finance

  • 2021-22 financial year, estimated deficit of $101.6 billion mainly due to counter-cyclical fiscal measures and increase in recurrent expenditures.
  • 2022-23 to 2025-26 financial years, deficit for four years is expected.
  • Zero-growth in civil service establishments to reduce expenditures.
  • Trim government recurrent expenditures by 1% in 2022-23 without affecting the livelihood-related spending.
  • Raise the rate of Stamp Duty on stock transfers, from 0.1% to 0.13%.
  • There would not be adjustment of profits tax and salaries tax.

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