Hong Kong Citizens Not Yet Sold On The Idea Of Sales Tax

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

01 December 2003

A recent survey undertaken by the Hong Kong Polytechnic University entitled ‘Introduction of a GST; Is the Public Ready?’ has found a mixed response to the prospect of a sales tax, and has concluded that the city’s public are not yet ready for the new tax.

The survey, commissioned by Ernst & Young and conducted by telephone earlier this month, showed that given a straight choice between the introduction of a sales tax or an increase in direct taxation, 45% preferred the latter, against 33.9% who favour a sales tax. Also, the public were generally more receptive to the idea of a sales tax if direct tax was decreased as a trade-off.

When asked what constituted an appropriate rate for the sales tax, just under 50% of the survey said 3% would be acceptable, to be introduced over a two to three year timeframe. However, over half of the respondents (56.8%) told the survey that a sales tax would cause them to spend less.

There was also opposition to the idea of a uniform rate across all products and services, with 47.5% opposing a flat rate, although a large number of people favoured a flat rate (40.7%). Nevertheless, the overwhelming majority supported exemption for certain sectors such as medical services, and over half (53.9%) thought there should be refunds for small businesses.

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