Tang Expected To Unveil GST Timetable

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

09 March 2004

The introduction of a goods and services tax (GST) in Hong Kong is increasingly being seen as a necessary move in order to help bring the territory's budget deficit under control, and Financial Secretary Henry Tang is expected to unveil a timetable for the implementation of such a levy when he delivers his budget on Wednesday.

Observers have suggested that the proposal has gained in popularity due to the fact Hong Kong's comparatively narrow tax base makes increasing direct taxes impractical, especially given the current regional trend towards cutting direct taxation in order to attract foreign investment.

Speaking to the Hong Kong Standard, deputy president of CPA Australia's Hong Kong and China division, Marcellus Wong explained that:

"Even if the economy is flat or declines, the worst case is that GST revenues will record no growth but the base will still be there. At any rate it's better than the direct tax which fluctuates with the economy's ups and downs."

The introduction of a stable tax such as a GST would also help to reduce the government's reliance on investment and land income for revenue, both of which have fluctuated wildly over the past few years.

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