PRESS RELEASE

Government welcomes discussions on how to broaden tax base

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In response to media enquiries, a Government spokesman said today (August 23) that the Government noted the community's concerns about the proposed Goods and Services Tax (GST).

"Earlier studies have indicated that GST is a good option to broaden Hong Kong's tax base and maintain our competitiveness," he said.

"The objective of the current public consultation on tax reform is to identify the best option to broaden our tax base and ensure our future prosperity and stability. We welcome opportunities to work together with various sectors of the community in identifying the best option for broadening our tax base and are looking forward to substantive and thorough discussions on this important subject during the consultation period."

The spokesman pointed out that as a result of our ageing population, the percentage of people aged 65 or above would increase to 25% in 2030 from the present 12%. Health and social welfare costs associated with the ageing population would increase, while the number of Salaries Tax payers would decrease.

There would also be a growing demand for government investment in education, manpower training and retraining due to the ongoing economic restructuring. In response to these structural challenges, we have to reform our current tax system to broaden the tax base and ensure that we will have the resources to provide these necessary services in response to future community needs.

Ends/Wednesday, August 23, 2006
Issued at HKT 18:42

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