Apparently unfazed by last week's LegCo motion against the introduction of
goods and services tax (GST), Financial Secretary Henry Tang yesterday said he
was willing to treat views on the GST with an open mind in order to broaden the
tax base in Hong Kong.
Tang also welcomed discussions that included various income proposals and the
protection of the low-income families.
"We will consider if there is a need to conduct at the right time a
preliminary summary of suggestions we have heard so far.
"It will also include things that are mentioned by the most people as well as
our response," he said after attending a seminar on the GST and the tax base.
This is only the starting point of the discussion as we are only three months
into the nine-month public consultation.
"In 2002, when the report by the task force on broadening the tax base came
out, there was not any across-the-board, intensive discussion in the society.
"So this is a very good opportunity for us to discuss thoroughly, while
society will also gain through learning about this issue," Tang said. His
remarks came less than a week after the Legislative Council carried a motion,
though non-binding, that opposed the introduction of the GST, by a landslide
margin.
At the seminar, guest speaker unionist legislator Chan Yuen-han, opposed the
GST on the ground that it was a regressive tax.
The GST would widen the wealth gap between the rich and poor people, he said.
"It is not a fair tax because the rich and the poor pay the same level of tax
for buying a bottle of water," she said in reply to Tang.
Moses Cheng, who chaired the task force on broadening the tax base in 2000,
said the GST was the most suitable tax that could broaden the tax base without
affecting Hong Kong's competitiveness.
Although some have suggested increasing the rate of salaries tax, he said
that would not help broaden the tax base in Hong Kong.
He also spoke against raising the profits tax rate because it was against the
global trend and would turn foreign investors from coming to Hong Kong.
Economic professor Leonard Cheng from the Hong Kong University of Science
& Technology said the GST, at such a low tax rate, is less prone to tax
evasion.
"There are people who make offshore earnings and do not pay salaries tax in
Hong Kong, but they will have to pay the GST when they spend money in Hong Kong.
"There are also some very rich people who earn money from bank interests but
they do not pay the salaries tax. But again they need to pay the GST if they buy
things," said the academic.
