Top > Business > 2006 > December > 2006-12-11

Hong Kong Scraps New Tax

Hong Kong intends to cancel its plans to start a goods and services tax (GST), after the government failed to attain public support for the move. Hong Kong`s Financial Secretary Henry Tang said: "We accept that at this time we do not have public support or the right conditions" to introduce the tax. Tang said that it became clear from comments he received that the government was unsuccessful in convincing the public that the tax is the best option for dealing with Hong Kong`s tax base problems.

Tang said that the government will stop promoting the plans to establish the controversial 5% tax rate for goods and services, for the remainder of the consultation period, which was set for 9 months, and called upon Hong Kong residents to express their opinions regarding expanding Hong Kong`s tax base. The government`s economists have stressed that the country`s tax base must be increased.

Donald Tsang Yam Kuen, Hong Kong`s Chief Executive, decided to pull back the controversial proposal and enjoyed full support for the decision from Hong Kong`s cabinet. Tsang said he believed the decision fully expresses the will of the people and their opposition of imposing GST at this time. The tax was widely apposed. Mass protests were held during the consultation period and all major political parties openly apposed the tax, accusing Tsang of robbing the poor in order to pay off the rich, as well as, putting Hong Kong`s booming tourist industry in jeopardy.