HK Authorities Won't End Tax Reform Consultation Early

by Mary Swire, for LawAndTax-News.com, Hong Kong

17 October 2006

Speaking on the radio at the weekend, Hong Kong's Secretary for Financial Services and the Treasury, Frederick Ma says the Government will not shorten the consultation period on tax reform, even if the Legislative Council passes a motion opposing the introduction of a goods and services tax on Wednesday.

Mr Ma urged lawmakers and the public to adopt an open attitude when discussing the issue.

"We feel that the goods and services tax is the best way to broaden our tax base. This is a very important subject for Hong Kong to discuss and we should allow a lot of time, until the end of March next year, to discuss this important issue," he concluded.

While a healthy economic recovery has helped swell the government's coffers, more than half of the working population of the Special Administrative Region falls outside of the tax net. Moreover, a substantial portion of Hong Kong's non-tax revenues accrue from land sales and investment income, sources which are subject to a high degree of volatility.

Like many jurisdictions, Hong Kong is also grappling with the problem of an ageing society which will soon begin to stretch the government's resources. It has been suggested that the introduction of the goods and services tax would offer greater financial security.

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