Hong Kong Must Widen Tax Base, Says Ma

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

08 December 2006

Although the Hong Kong government no longer intends to pursue the controversial idea of introducing a goods and services tax in the territory, Secretary for Financial Services and the Treasury Frederick Ma says that Hong Kong still needs to look for other ways to tackle its narrow tax base.

In a surprising about turn, the Hong Kong government said earlier this week that it will abandon plans for a goods and services tax in the face of widespread public hostility to the idea.

It had been rumoured that the SAR dropped the proposals following the recent visit of National People's Congress Standing Committee Chairman Wu Bangguo. However, speaking on local radio, Ma refuted this suggestion and claimed that the GST issue had been discussed several weeks ago.

The secretary said the Government had already known the public would not easily accept the proposal when it launched the tax-reform consultation and had decided that it was futile to push the idea in the face of widespread opposition.

However, Ma said that the public had accepted that Hong Kong must widen its tax base and other solutions would be sought.

Ma reiterated that the tax-reform consultation will continue, adding that the Government will publicise the other options recommended in the 2002 tax-reform report.

Encouraging the public to offer feedback, the secretary said a final report will be submitted next year for the next term government's consideration.

Ma claimed that the Government's move to drop its plans to introduce GST will not affect Hong Kong's short-term financial situation.

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