Hong Kong Government Will Not Impose Sales Tax In Next Budget

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

22 October 2002

Despite having hinted, earlier this month, at the possibility of introducing new taxes or increasing existing levies in order to help the SAR authorities achieve their pledge to balance the budget by 2007, Hong Kong's Financial Secretary, Antony Leung Kam-chung announced this week that he will not consider the introduction of a sales tax.

Speaking at a recent meeting on budgetary policy, Mr Leung expressed concerns that a sales tax would lower spending, thus inflicting further damage on the territory's economic growth.

Economists have warned that any increase in taxes in order to ease the ballooning deficit is likely to have an adverse effect on consumer confidence, leaving the Financial Secretary with relatively few viable options.

However, reporting Monday on the budget meeting, the Hong Kong Standard revealed that although Mr Leung has not yet suggested any specific tax measures to reduce the deficit, he confirmed that public spending is likely to be reduced.

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