Major political parties in the Legislative Council are divided on whether the government should issue cash vouchers to citizens in an attempt to stimulate domestic consumption and confidence.

The Liberal Party and Federation of Trade Unions are supportive of the idea, but the Democratic Party, Democratic Alliance for the Betterment and Progress of Hong Kong and Civic Party have doubts about the plan.

Financial Secretary John Tsang yesterday began the consultation exercise for the 2009-10 Budget by meeting with representatives from the Federation of Trade Unions (FTU), Liberal Party and some independent legislators.

After the meeting, Liberal Party Chairman Miriam Lau said they proposed issuing a HK$1,000 voucher to each Hong Kong permanent resident, plus a 50 percent salaries tax rebate capped at HK$5,000 to encourage people to spend money.

In their opinion, the shopping vouchers will stimulate spending, help retailers and sustain jobs.

Liberal Party lawmaker Vincent Fang, who represents the wholesale and retail constituency, said Tsang is still weighing the pros and cons of the proposal.

The FTU also favors this plan, but it proposed a higher voucher amount of HK$2,000.

"The measure should be strong enough to stimulate spending," FTU Chairman Wong Kwok-kin said after the meeting. "To make the effects last longer, we propose the vouchers be issued once every quarter or six months."

He also said there should be a stipulation against using money for rent, school fees and taxes.

Independent lawmakers, on the other hand, were less than enthused about the vouchers. After the meeting with Tsang and four non-affiliated lawmakers, accounting constituency legislator Paul Chan said the majority of the legislators present had reservations about the plan.

"The plan should be specifically targeted to the lower-income families, but we are afraid that they won't spend money after receiving the vouchers," he said.

Chan, an accountant, proposed a range of one-off measures to ease people's financial burden, including a tax rebate of up to HK$10,000 to families earning less than HK$800,000 per year.

Regarding the provisional tax, he said there is no reason to have it waived, as people can apply for deferred payment, but the government may allow them to make interest-free installed payments.

On measures to create jobs, the FTU asked the government to create more short-term jobs, and it said that those enterprises employing additional staff should be given tax concessions as a reward.

They also proposed extending the cross-district traffic-allowance plan from four districts to all 18 to benefit more workers.

(HK Edition 11/26/2008 page1)