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LegCo Opposes GST Introduction, HK Government Disappointed

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

27 October 2006


Members of Hong Kong's Legislative Council last week supported a motion opposing the introduction of a Goods and Services Tax in the territory

The motion, moved by Dr Hon Yeung Sum, stated: "That this Council opposes the introduction of a Goods and Services Tax."

Commenting on the motion last Thursday, Financial Secretary, Henry Tang told journalists that:

"We are disappointed at the outcome. Actually the biggest difference between the Government and the Hon Yeung Sum's motion is that the actual effect of the motion will suffocate further discussion on broadening the tax base and a Goods and Services Tax. I hope in this incident, that LegCo members have not misjudged public sentiment nor have they lost a valuable chance to discuss a very important subject in the community."

He continued:

"Actually, there was a lot of discussion today regarding various different types of taxes. New taxes, for example capital gain tax, progressive tax or dividend tax and indeed they have raised a number of questions as well as concern about the GST. This is exactly why we should continue this discussion and we should continue to consult."

"One of the most talked-about subjects is income disparity that GST might bring. I think this is a very superficial argument and indeed it may be intentionally misguided. Because when we launched the GST debate, together we have a large basket of other compensation and measures to mitigate the effect on lower income families."

"The income disparity issue is something that the Government must address and we will address in any future tax system. We will not launch any tax system that is not fair and that would not address this income disparity issue."


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