Financial Secretary of the Hong Kong Special Administrative Region (HKSAR)
Henry Tang said here Monday the society should continue the consultation on the
controversial Goods and Services Tax (GST) to find ways for its narrow tax base.
When asked by the press Monday, Tang said the SAR government had
received 1,300 submissions in the first three months of the tax reform
consultation, and most support continuing discussion on the issue.
Tang admitted that although the majority of submissions agreed that Hong
Kong's tax base is exceptionally narrow, they have reservations about a GST.
"But they feel the public consultation should continue," Tang said.
Some people have said that basic daily necessity should be exempted and
luxury items should be taxed progressively. Some have proposed to introduce new
taxes such as an "electricity tax," he said.
"The government is willing to discuss all options with the community," Tang
said, urging the continuity of the consultation to express their views in the
coming six months.
The controversial proposal to introduce GST in the city known for its simple
and low tax system, had triggered criticism and hot debate in the society as the
Legislative Council will discuss a motion on Wednesday, asking the government to
cease the consultation.
Tang hoped legislators will take a realistic view, and not neglect the
problem that Hong Kong has a narrow tax base and that the issue has not yet been
fully discussed.
"A steady source of income is important as government spending is steady
compared with its revenues," he said, adding Hong Kong's salaries tax, which is
the government's major source of revenue, will shrink in the wake of an aging
population.
It is predicted that by 2023 the HKSAR government will have to spend an
additional 50 billion HK dollars (6.43 billion U.S. dollars) in health-care
services. And it will cost 5.2 billion HK dollars (about 668 million U.S.
dollars) if the salaries tax rates revert back to the 2002-03 level and another
2.4 billion HK dollars (308 million U.S. dollars) if small class education is
implemented.
"To discuss the tax system," Tang said, "it is a good time now as the economy
is improving, inflation is low and the unemployment rate is
falling."
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