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CARE NEEDED ON NEW TAX OPTIONS
Chamber survey shows Government spending restraint favoured but environment tax supported

There is a clear preference in the business community for Government spending restraint over new taxes—including reservations about a consumption tax, according to a new taxation and revenues survey of its members by The Hong Kong General Chamber of Commerce (HKGCC). An exception is the surprisingly large support for an environment tax.

The survey's objective was to assess members' views ahead of the Government's soon to be released reports from its Task Force on future revenue needs and its Expert Committee on alternative taxes, including a broadly-based consumption tax.

Commenting on the new survey results, Chairman of HKGCC's Taxation Committee, Mr Kaushal Tikku, said: "The fact that there is widespread opposition to new taxes is hardly a surprise as most people anywhere in the world, given a choice between more or less taxes, usually choose the latter."

"Hong Kong has a well-deserved and widely-appreciated reputation for its low tax policy and, indeed, this is inscribed in the Basic Law (Article 108) as the reference point for any future laws related to taxation matters."

On the question of whether a broadly based sales or consumption tax is appropriate for the Hong Kong SAR, 46.7 per cent of respondents said it was not and 28.7 per cent said it needed more study. Only 24.6 per cent of respondents favoured the introduction of such a tax.

Mr Tikku said the consumption tax response and the wider opposition to new taxes or tax increases could reflect respondents" concerns about expanding Government spending and doubts on the "structural deficit" problem.

What is surprising and encouraging is that over 78 percent of the respondents said that they would pay additional taxes for environment protection initiatives.

This Survey was distributed to members recently, and the Chamber received 243 completed replies for an 8 per cent response rate. Although the number of responses was small probably because of the technical nature of the tax questions, the number was sufficient to provide a useful guide on members’ views. Results of the survey are attached.

Survey results are attached. For further information please call 2823-1242.