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Tax breaks for hiring domestic helpers may boost Hong Kong’s birth rate: study

Tax breaks for hiring domestic helpers may boost Hong Kong’s birth rate: study

Poll finds subsidies for those with newborns and more childcare support also among mothers’ top 10 ‘wish list items’ for encouraging more births.
Offering tax breaks for Hong Kong families who employ domestic helpers and ensuring husbands do a greater share of the housework may encourage mothers to have another child, a study has found.

The survey, conducted last month by the office of New People’s Party legislator Judy Chan Kapui and two women’s associations, asked 536 mothers to select their top 10 “wish list items” that would encourage them to increase the size of their family. The findings were released on Tuesday and may hold clues on how Hong Kong authorities can tackle a declining birth rate.

The poll found 88 per cent of respondents identified a tax allowance for families hiring domestic helpers as important, a proposal previously floated by several local political parties in the run-up to last month’s budget reveal.

Financial Secretary Paul Chan Mo-po in January said he was considering the move, but the proposal was eventually dropped.

The minister instead offered to increase the tax allowance per child from the current HK$120,000 (US$15,286) to HK$130,000, but said it would have limited impact on encouraging more births.

The city last year logged a record-low number of births at 32,500. Declining birth rates, as well as several emigration waves, also contributed to a drop in the population from 7,401,500 at the end of 2021 to 7,333,200 by last December.

But the more generous tax allowance only ranked highly with 66 per cent of respondents compared with 87.5 per cent who preferred subsidies for mothers with newborns and 70 per cent who felt an increase in childcare support was more important.

About three-quarters of those surveyed said they wanted more family-friendly workplaces and jobs with flexible hours that could accommodate parents.

Another top-scoring wish list item was “a husband willing to share housework”, with an overwhelming 94 per cent ranking it highly. Seven out of 10 also said they wanted more “me time” after having another child.

In response to the survey results, legislator Chan urged authorities to offer tax breaks to those employing domestic helpers and a HK$20,000 handout per newborn, arguing the measures would signal the government’s support for those looking to have another child.

Lawmaker Kwok Wai-keung, of the Hong Kong Federation of Trade Unions, also called for a more aggressive policy to ensure businesses introduced family-friendly policies, which would encourage mothers to rejoin the workforce while also helping to boost the birth rate.

Kwok added he was concerned that devising a population policy could take a back seat as authorities focused on attracting more talent and investment to revive the post-Covid economy.

“It would be wrong for the government to consider family-friendly policies as a trivial matter … A comprehensive population policy is essential, but that would depend on the attitude and determination of the government,” he said.

Professor Paul Yip Siu-fai, a population health expert at the University of Hong Kong, agreed that family-friendly workplaces could be a big encouragement for prospective mothers, with such policies already being implemented in Japan.

“Hong Kong is not doing badly, but the Japanese government is ahead of us in terms of investment, awareness and a sense of urgency,” he said.

Citing the tax deduction offered to companies in Hong Kong investing in research and development as an example, Yip suggested that similar incentives could prompt businesses to include workplace childcare services and breastfeeding rooms.

But the scholar also said cultural factors could partly explain why Japan’s fertility rate stood at 1.4 in recent years while Hong Kong was 0.78 in 2022, as traditional family values were more robustly observed in the former.
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