Leung Slammed For 'Selective' Tax Hike Plans

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

13 January 2003

Hong Kong Financial Secretary, Antony Leung Kam-chung has come under fire for suggesting that the middle classes and those with savings are likely to be hit by tax increases in his forthcoming budget.

Speaking on Thursday, Mr Leung announced that:

'We will see if the income of some members of the public has basically not been reduced, especially those with stronger buying power because of deflation, and they may be putting their savings in the banks. If there's a time when we need to consider raising tax, we can do it more selectively. I think it will not pose too great an impact on consumption and the overall economy of Hong Kong.'

The Financial Secretary went on to add that: 'Everyone has their own spending pattern. Those who can afford it - and I believe they can see that we are facing a very serious deficit problem - can accept tax increases to share the difficulties.'

However, speaking to the local media following Mr Leung's announcement, tax experts and representatives from the groups most likely to be affected by the increases, urged the government not to increase the tax burden on savers and the middle classes, arguing that these taxpayers have already been severely affected by the economic downturn, arguably more so than any other group.

'The middle class has already been most affected in the economic downturn,' Marcellus Wong of the Taxation Institute told the Hong Kong Standard last week, explaining that: 'About 500,000 people in the so-called sandwich class are paying taxes that account for about 90% of total tax revenue.'

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