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FS speaks on public consultation on tax reform
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Following is the transcript
of remarks (English portion) by the Financial Secretary, Mr Henry
Tang, on public consultation on tax reform at the Central Government
Offices this morning (December 5):
This morning, I have reported to
the Executive Council on the interim review of the public consultation
on tax reform. I will be a little bit briefer on the English version
because I will hand out my speaking notes to you after I finish.
In the nine-month consultation on
tax reform which started in July, we have collected 2 200 written
submissions and attended 260 meetings and seminars. We have received
a lot of views from the public. We thank everyone for their views
and observations.
First, the public has two very clear
but differing views. The majority of the public understands that
our tax base is narrow and agrees that this problem has to be addressed.
By broadening the tax base, we can stabilise our revenue and also
improve our public finances. This would minimise the impact on our
public finances were we to face any economic downturns sometime
in future. The public's views on this are very clear. But on the
other hand, the majority do not consider that the Goods and Services
Tax is an appropriate option to solve the tax base problem. This
view is again very clear. These two views suggest that the public
understands that there is a problem with our tax base, as pointed
out by the Government. It needs to be addressed, but they have considerable
reservations over the use of Goods and Services Tax. Both views
should be respected.
As to how the tax base problem should
be solved, there is no consensus among the public. But there is
a consensus in the community on the problems of our narrow tax base.
The public recognises the importance of planning ahead and the need
to save for a rainy day. But the views are also strongly against
GST to solve the problem.
To conclude, there are two main points.
First, the public shares the view that there is a need to broaden
our tax base. Second, although the public understands that GST can
broaden our tax base, it is clear from the views collected that
we have not been able to convince the majority to accept GST as
the main option to address the tax base problem. We accept that
at this time there is insufficient public support nor are the conditions
right for introducing GST.
Hence, for the remaining part of
the consultation, we will not be advocating GST. We hope the public
will continue to provide views on other options which we have uploaded
onto the tax reform website, based on the report in 2002 done by
Moses Cheng. It listed out in a table form the pros and cons of
a number of other options. We welcome the public to download it
and use it as a reference for discussion. We will continue to listen
carefully and participate in the discussions, so that by March next
year, upon the conclusion of the consultation, we will draw up a
report for consideration by the Government of the next term. Thank
you very much.
(Please also refer to Chinese portion
of the transcript.)
Ends/Tuesday, December 5, 2006
Issued at HKT 12:37
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