Advisory Committee on New Broad-based Taxes Launches Public Consultation

The Advisory Committee on New Broad-based Taxes today (6 August) issued a consultation document to seek public views on what types of broad-based taxes may be suitable for Hong Kong, should there be a need for such taxes.

The establishment of the Advisory Committee was announced by the Financial Secretary in the 2000-01 Budget in the light of projected operating deficits for some years to come.

Entitled "A Broader-Based Tax System for Hong Kong?", the consultation document sets out 13 options to broaden the tax base.

The options fall into two groups - those that would increase the revenue productivity of existing taxes and those relating to introduction of new taxes. The former includes raising the rates of salaries tax, profits tax and stamp duty on property as well as reducing allowances and deductions under salaries tax. Possible new taxes include capital gains tax, tax on interest, on dividends and worldwide income, a land and sea departures tax, payroll and social security taxes, poll tax, a general consumption tax and tax on mobile telephones and signboards.

Speaking at a press conference to launch the two-month public consultation exercise, the Chairman of the Advisory Committee, Mr Moses Cheng, stressed that the Advisory Committee had not taken a position on any of the options studied.

"We would like to hear the views of the public before we submit our report to the Financial Secretary by the end of this year," he said.

"Tax is never a popular subject, but we sincerely invite the public to address the issues in an open-minded manner."

"Eventual implementation of any tax proposals will be the prerogative of Government. I have no doubt that the Government will take into account all important considerations before making a final decision on issues such as detailed design and timing of implementation," he added.

Established in June 2000, the Advisory Committee has surveyed the practices in other developed jurisdictions, and considered the relevant benchmarks for good tax systems against which it evaluated the system in Hong Kong.

In making its recommendations, the Advisory Committee must have regard to the overriding principle of maintaining a low and simple taxation regime and preserving Hong Kong's competitiveness. It has also to take into account, among other things, the burden on the economy, the cost of administration and compliance, revenue productivity and stability and equity.

Members of the Advisory Committee comprise tax, accountancy and legal professionals, academics, business, consumer and community leaders.

The consultation document will be available at District Offices, the Inland Revenue Department and the Treasury Collection Offices. It can be downloaded at the website www.info.gov.hk/fb/ac/index.htm.

Written submissions may be made by mail or e-mail to the Advisory Committee at the following addresses before 6 October 2001.

Monday, 6 August, 2001

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