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Publications and Press Releases :
Press Release
: News Archives
Final Report of Public Consultation on Tax Reform
released
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The Government today (June 12)
released The Final Report of Public Consultation on Tax Reform containing
a number of recommendations.
The Final Report recommends:-
1. having raised public awareness
on the deficiencies of a narrow tax base, the Government should
continue to study options for broadening the tax base and address
this fundamental issue at a suitable time in the future;
2. in studying the options for broadening
the tax base, the Government should take into full account the views
collected in this consultation exercise and consult the public further
on those options which are more practical;
3. as the problem of ageing population
is getting more serious and this would bring additional pressure
to our public finances, the Government should consult the public
on the health care financing proposals as soon as possible; and
4. to enhance Hong Kong competitiveness,
the Government should continue to advance education and manpower
training, and should explore sustainable financial arrangements
so as to respond to the long-term needs.
"Although the public cannot
accept at this point in time for the Government to introduce a Goods
and Services Tax (GST), the public has generally obtained a better
understanding of the problems of our narrow tax base during the
consultation process and agreed that the Government should broaden
the tax base to stabilise revenue to enhance fiscal health,"
a Government spokesman said.
Members of the community have also
put forward other options for broadening the tax base such as introducing
a green tax, land and sea departure tax, tax on luxury goods, progressive
Profits Tax as well as reducing personal allowances under Salaries
Tax.
There are suggestions that the Government
should not rely on a single option but should deploy a basket of
options to broaden the tax base and stabilise our revenue sources.
The public does not have any clear inclinations or mainstream views
on which option or options that the Government should adopt.
"Although these options
can enhance government revenue, none of these could solve the problem
of our narrow tax base in the long run," the spokesman said.
In considering the various options
for broadening the tax base, we consider that we should take account
of the following principles:-
1. The option must be effective in
broadening the tax base and providing stable and considerable revenue
for the Government to meet its future needs;
2. The option must be fair and in
line with the "capacity to pay" principle, and should
not widen the wealth gap; and
3. The option is in line with our
simple and low tax system so as to attract capital and talent and
maintain our competitiveness.
"Although our economy
has recovered and the Government's financial position has improved,
Hong Kong's dependency ratio would be rising rapidly in the face
of our ageing population. Moreover, globalisation would bring challenges
to our education and manpower training," the spokesman said.
"In the long run, our
narrow tax base would limit our ability to allocate resources to
invest for the future and to respond to these challenges. This would
affect the stability of our public finances and undermine our competitiveness.
Therefore, it is necessary for the Government to address this fundamental
issue at a suitable time in future," he added.
During the nine-month consultation
exercise ending March 31 this year, about 2,400 written submissions
were received. The Government announced during the release of the
interim report in early December last year that the Government had
not been able to convince the majority of the public to accept GST
as the main option to address the tax base problem. Hence, the Government
would not advocate GST in the rest of the consultation period but
would continue to listen to views on other viable options to broaden
our tax base.
The content of the Final Report has
been uploaded to the tax reform website (www.taxreform.gov.hk)
today.
Ends/Tuesday, June 12, 2007
Issued at HKT 12:10
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