Hong Kong’s legislators probed Hong Kong Financial Chief Paul Chan on Thursday at the Legislative Council (LegCo) over the budget he delivered on Wednesday. Chan was questioned over the stamp duty increase, as well as questioned over support measures for unemployed people.
Following the announcement that Hong Kong’s stock stamp duty will increase from 0.1 per cent to 0.13 per cent, some lawmakers voiced concerns over the potential damage done to Hong Kong’s reputation as a financial centre.
Legislator Christopher Cheung, representing the financial industry, blamed Chan for the stock market’s dive after the announcement: “Yesterday [the stock market] dropped by over a thousand points, several hundred billion dollars evaporated, it must have been caused by the increase in stamp duty,” said Cheung.
Hong Kong’s Hang Seng Index, at one point, dropped by 1,020 points on Wednesday – dipping from 30,702 when the market opened to 29,682 at 3pm.
In response, Chan said that the change was necessary, and that Hong Kong was not alone in see a stock market drop: “Even if we don’t take stamp duty, if we don’t reform, these companies can’t be listed in Hong Kong, and the stock market would not be as prosperous as now,” said Chan.
“Hong Kong was not the only stock market that had a drop on Wednesday, look at Japan, Korea, and Shanghai, the greatest fall was 3 per cent at most, and now the index is up by over 600 points, fluctuations in the stock market are common.”
DAB lawmaker Elizabeth Quat voiced her concern to Chan on Thursday, that the stamp duty increase would harm Hong Kong’s competitiveness: “With regards to the stamp duty, a lot of people from the IT industry told me that, since Hong Kong is competing globally, they are concerned that the increase will harm Hong Kong’s attractiveness and competitiveness as a financial market,” said Quat.
Cheng Chung-tai, one of the two remaining non-pro-establishment lawmakers, slammed the increase as punishing the middle-class: “Under economic recession, the financial secretary’s budget is clearly punishing the middle-class,” said Cheng. “While the stock market’s reaction yesterday might not be related, you’re harming Hong Kong’s financial status.”
Other lawmakers also asked Chan to consider relaxing the requirements for the 100 per cent government guaranteed loan scheme, which is being offered to the unemployed.
Alice Mak of the Hong Kong Federation of Trade Unions questioned why people who do not have sufficient work – but are not unemployed – cannot apply for the loan.
Chan said: “Whether we can relax [the requirements] and allow people who have less income apply, it’s quite complicated, and we have to consider the problem of abuse… The Labour and Welfare Bureau also lowered the working hours threshold for the working family allowance.”
“You don’t care about the Labour and Welfare Bureau,” Mak responded. “If the bureau could handle it well, you wouldn’t have to set up the loan scheme.”
Some lawmakers also criticised the five-month distribution of the proposed HK$5,000 electronic spending coupons as being too cumbersome, while others requested the implementation of an unemployment subsidy.