Goods and Services Tax
(GST) was a proposed Value Added Tax
in Hong Kong
. Consultation over a period of nine months was launched on 2006-07-19 and stirred considerable controversy.
It launched a fierce debate amongst local taxpayers, lawmakers, journalists, politicians, who hotly debated the need for the tax, and the shape any taxes should take. The plan to levy GST was dropped on 2006-12-05.
The Government argued that Hong Kong's tax base was narrow; thus, a single-rate GST was a viable option for Hong Kong in order to broaden the tax base and secure the sustainability of tax revenues base and the capacity to meet public expenditure needs in the long run.
The political context
The economic context
According to Denise Yue Chung-yee, 17% of working people paid 80% of the income tax of Hong Kong, i.e. households with monthly income more than HK$45 000 pay 80% of income tax of Hong Kong. Meanwhile, a signification portion of those 17% of working people was double income families. They are not really middle class, but only theoretically lower middle class who have economic ability of middle class. For example, a man who earns $40000 a month pays "negligible" amount of income tax, while a family composed of a woman earning $30000 and a man earning $30000, totally earning $60000 a month need to pay "very heavy" tax. The GST was supposed to curb this social problem. However, the marketing sector was getting to be the sector which employs most... Read More