HK Demonstrators Stage Tax Increase Protest

by Mary Swire, Tax-News.com, Hong Kong

05 March 2002

Over 800 people, including representatives from Hong Kong's major political parties and trade unions, staged a demonstration at the weekend against Government plans to increase taxes in order to reduce the structural budget deficit.

Recommendations released by a Government Advisory Committee last week included the introduction of a sales tax and land and sea departure taxes, the reduction of generous personal allowances granted in more prosperous times, and a vicious pruning of Government bureaucracy.

However, the protesters who gathered at Chater Garden in Central warned the authorities to find another way to reduce the deficit. Civil servants attending the demonstration also expressed anger that expenditure on their salaries was being blamed as one of the contributing factors in the current economic crisis.

Speaking on RTHK Radio 3, Paul Pang, the Chairman of the Senior Non-Expatriate Officers' Association, stressed that the budget deficit has been swollen by other factors, such as low property and land tax collection levels and the narrow tax base. He pleaded with the public not to make civil servants the scapegoat for the jurisdiction's economic woes.

Meanwhile, economic analysts in the region responded to the Advisory Committee's recommendations fairly positively, although many warned that the controversial sales tax proposals should be discarded.

'The land and sea departure tax could come into immediate effect as the Government could revise the charges in future in accordance with the economic climate,' Li Kui-wai, a City University Associate Professor of Economics and Finance commented on Friday. He added that the reduction of personal allowances would also give a substantial boost to Government revenues.

However, Mr Li and other tax experts have warned against the introduction of a sales tax, arguing that it would compromise the jurisdiction's international reputation as a low tax region, and dampen already weak consumer sentiment on a domestic level.

Recommended