With the city's birth rate plummeting to record lows, several political parties are pushing for a progressive children's tax allowance in the upcoming Budget set to be released on Wednesday.
Their calls come as a record low of 31,714 babies were born last year—a drop of nearly 50 percent compared to 60,803 births a decade ago—despite the implementation of a one-off HK$20,000 newborn baby bonus in 2023.
The scheme had received about 64,390 eligible applications and disbursed funds to 63,900 applicants, totalling approximately HK$1.278 billion, as of January 31.
According to data from the Deputy Chief Secretary for Administration's Office, 34,836 payments were made in 2024, 26,922 in 2025, and 2,142 in the first month of 2026.
The scheme also recorded 2,073 cases where the same applicant received the bonus twice, and 30 cases where an applicant received it three times, which the government explained were instances involving families with twins or multiple births over the scheme's duration.
Political parties push for reform in tax allowances
With the scheme scheduled to end in October, several political groups—including the Hong Kong Federation of Trade Unions (FTU), the Business and Professionals Alliance for Hong Kong (BPA), the Liberal Party, and Roundtable—are advocating for more impactful incentives to boost the birth rate.
Among the proposals, the FTU suggests that the tax allowance for the first child be set at HK$180,000, with an additional HK$360,000 for the second.
Echoing similar sentiment, Executive Councilor Ronny Tong Ka-wah has suggested raising the basic children's allowance to HK$150,000 to directly ease the financial burden on families.
Tong also proposed that companies offering or sponsoring childcare centers meeting the Social Welfare Department's standards should receive tax deductions.
Lawmaker Peter Douglas Koon Ho-ming, also the chairman of the Hong Kong Council of Social Service, expressed that the HK$20,000 cash bonus is insufficient for middle-class families.
Koon advocated increasing the bonus to at least HK$30,000 and that the cash incentive should be more targeted.
Childcare support beyond cash
Meanwhile, Lawmaker Kazaf Tam Chun-kwok from the New Territories Association of Societies noted that many families are more concerned about childcare support than the HK$20,000 cash bonus.
Tam urged the government to strengthen childcare facilities, including day care and temporary nurseries, to ease the pressure on dual-working families.
However, lawmaker Elaine Chik Kit-ling from the Democratic Alliance for the Betterment and Progress of Hong Kong raised concerns that abruptly ending the current scheme could create uncertainty for families planning to have children.
Chik believes extending the scheme could be a reasonable approach, acknowledging it should remain an auxiliary measure.
She also highlighted Singapore's model, which offers families with children aged 12 and under a one-off HK$500 childcare subsidy. Nonetheless, she cautioned about the significant administrative costs involved in eligibility checks and merchant registrations.
However, economist Simon Lee Siu-po argued that increasing children's allowances or offering cash bonuses would yield limited effects.
Taking the marginal tax rate of 17 percent on salaries as an example, he noted that a HK$10,000 increase in the allowance would save a taxpayer only HK$1,700 annually—far too little to offset the expenses of raising a child.
He pointed out that lowering property stamp duties could offer more substantial relief, as taxes on an HK$8 million property could amount to HK$240,000.
Separately, it has come to light that the pay freeze for civil servants may soon be lifted, as lawmakers are suggesting linking proposed salary increases to individual performance.
Several lawmakers have expressed concerns about the current pay structure, arguing that it is unjustifiable both in terms of performance metrics and financial implications. They suggest that adjustments should be made so that only around 80 percent of top performers receive a salary increase, ensuring that rewards are aligned with actual achievements.
