HK Taxpayers Urged To Be 'Rational' Over Tax Reforms

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

12 September 2006

Hong Kong's Financial Secretary, Henry Tang has urged the public to hold a rational and comprehensive discussion on the need for Hong Kong to broaden its tax base.

Speaking last week at a forum on the proposed introduction of a goods and services tax, Mr Tang said the Government had accrued a $190 billion deficit in the previous financial downturn.

He warned the next downturn could hit the public coffers even harder and that Hong Kong's reserves would easily be depleted unless alternative sources of income are found.

Three questions that Mr Tang suggested taxpayers posed in their consideration of tax reform were:

• Whether Hong Kong's existing tax base is too narrow;
• If a GST is the solution; and,
• How this can be implemented without affecting the low-income sector.

He suggested that the issues raised by the three questions are closely interlinked.

"The basis of a consultation is that the Government should not make up its mind and launch a consultation just for selling a policy."

"I think the general policy should be that Government proposes this consultation because we envisage that there are many long-term issues that we need to deal with and this is a time - a suitable and appropriate time - to consider and discuss some of these wide-ranging and very serious issues that will put pressure on our public finances in the future," the Financial Secretary concluded.

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