PRESS RELEASE

LCQ18: Public consultation on tax reform

************************************************

Following is a question by the Hon Tam Heung-man and a written reply by the Secretary for Financial Services and the Treasury, Mr Frederick Ma, in the Legislative Council today (January 10):

Question:

The Government announced on December 5 last year that it would stop advocating the Goods and Services Tax but continue the public consultation on other options for broadening the tax base. In this connection, will the Government inform this Council：

(a) of the channels through which the Government facilitates the public's understanding of the various options to broaden the tax base, apart from uploading the Final Report of the Advisory Committee on New Broad-based Taxes submitted in 2002 onto the relevant government web site；

(b) whether it has now set priorities for the choice of the various options for broadening the tax base; if it has, of the details; and

(c) whether it will adhere to the "revenue-neutral" principle in adopting any options to broaden the tax base, i.e. to reduce the burden of the existing taxes on the public while introducing new taxes; if it will, of the types of the existing taxes involved; if not, the reasons for that?

Reply:

Madam President,

(a) In 2002, the Advisory Committee on New Broad-based Taxes chaired by Mr Moses Cheng submitted a detailed report to the Government on the Committee's study on the various options for broadening the tax base having regard to a set of internationally recognised principles of a good tax system. Since the launch of the public consultation, most of the options for broadening the tax base, other than the Goods and Services Tax, as proposed by different sectors have been covered by Mr Cheng's report. Therefore, the Government will use the report as the basis for continuing discussion with the public on the options for broadening the tax base. Apart from uploading the report on the Internet, the Government is prepared to discuss with interested parties viable options for broadening the tax base. We also welcome the public to continue to submit by post, fax or email their views to us on different options for broadening the tax base.

(b) The Government is open-minded and hopes that the public will continue to provide their views on other viable options for broadening the tax base for the remaining part of the consultation.

(c) The public consultation on tax reform is still carrying on and will end in March 2007. There is as yet no decision on how the tax base should be broadened and what should be the best option for achieving this purpose. We welcome public views on whether "revenue neutral" should be adopted as a principle in considering the options for broadening the tax base.

Thank you. Madam President.

Ends/Wednesday, January 10, 2007
Issued at HKT 11:43

NNNN