Hong Kong hiked stamp duty on stock trades on Wednesday for the first time in almost three decades as it tries to plug a pandemic-induced record budget deficit, sending the local equity market tumbling.

The business-friendly financial hub, which prides itself on low taxes and no capital gains tax, has been battered for two years by social unrest and then the coronavirus, putting a huge strain on government coffers.

In a bid to shore up finances, Financial Secretary Paul Chan said he would lift the levy on share transactions to 0.13 percent from 0.1 percent, the first increase since 1993.

The news sent the Hang Seng Index plunging more than 3 percent, while bourse operator HKEX collapsed more than 11 percent at one point.

“Whilst we are disappointed about the government’s decision to raise stamp duty for stock transactions, we recognize that such a levy is an important source of government revenue,” a spokesperson for HKEX said.

The government will spare no efforts in introducing measures to facilitate the development of the securities market, so as to take the financial services sector to the next level, Chan said.

The economy contracted a record 6.1 percent in 2020 but Hong Kong was already suffering going into the year, having been hit by months of violent protests that caused much of the city to be shut down for extended periods.

Chan told legislators he expected the budget deficit for the upcoming year to hit HK$101.6 billion (US$13.10 billion), smaller than HK$257.6 billion expected for 2020/21.

Chan said that Hong Kong’s fiscal deficit is at a record high, after the government last year spent HK$300 billion on supporting measures, including a cash handout to residents, tax breaks and wage subsidies for businesses. The deficits followed a 15-year period of accumulating surpluses.

The budget for 2021 “aims to alleviate the hardship and pressure caused by the economic downturn and the epidemic,” Chan said.

Hong Kong will introduce HK$120 billion in fiscal measures to help businesses and residents impacted by the coronavirus pandemic. Unemployed residents can get loans capped at HK$80,000 in a program that postpones payments for the first year and charges 1 percent interest.

The measures come after Hong Kong last week reported a 7 percent jobless rate between November and January, the highest since April 2004.

Vouchers worth HK$5,000 will also be issued in instalments to residents to boost consumption. Businesses and individuals will also receive tax relief. The tourism and technology sectors will also receive some support. Chan predicted the economy will expand between 3.5 and 5.5 percent.

The city is planning to start its vaccination program tomorrow and hopes are high the city may be able to make its way out of onerous social distancing measures that crippled business for much of the past year.

Chan highlighted the significance of opportunities from the mainland to Hong Kong’s development. “Hong Kong can open up greater room for development by leveraging the advantages under ‘one country, two systems,’ playing its unique role as a gateway and an intermediary, and integrating into the new overall development of our country,” Chan said.

By actively participating in the national dual circulation development strategy and seizing the opportunities brought by the development of the Guangdong-Hong Kong-Macau Greater Bay Area and the Belt & Road Initiative, Hong Kong will be able to achieve greater development, Chan said.