GST is difficult to enforce and costly to administer

PUBLISHED : Wednesday, 09 August, 2006, 12:00am
UPDATED : Wednesday, 09 August, 2006, 12:00am

The proposed goods and services tax is ill-conceived and will impose an additional workload on retailers, increase their accountancy costs, and requires the government to hire an additional workforce. The annually recurrent cost of civil servants to process the GST will consume most of the income generated by it.

A more efficient system would be to identify 'non-essential' goods, like tobacco, alcohol, petrol, sweets, chocolates and luxury foodstuffs, precious metals and stones, and fur garments - and tax them at source. This is already done in the form of an ad valorem tax on specific items, such as diamonds, and would be easier to enforce, involve a tiny percentage of the number of companies the GST would involve, and be considerably more efficient. Fewer goods, and no services, would be taxed, while the government would actually earn substantially more from the exercise to plough back into the community as promised.


Tomas Almberg said in his letter ('Think a 5pc GST is high? Consider prosperous Sweden', Aug 4): 'It is true that a GST will hit those with lower incomes harder, which is why Sweden has a social safety net. Hong Kong could have one, too.' He cannot be serious.

High taxes are necessary in Sweden - they pay 25 per cent value-added tax - for the government to finance its cradle-to-grave welfare system - second to none in the world. But Hong Kong is not run as a welfare state, so what is good for Sweden may not be good for Hong Kong, with regard to the proposed GST. The malaise in the Swedish economy is in no small part due to the taxation policy which rewards indolence and encourages illegality. Thus, our financial secretary should not be too optimistic about the revenue he expects to receive from a GST, if such a tax should be imposed.

ALEX TAM, Sai Kung

In response to Tomas Almberg, maybe Hongkongers wouldn't mind paying a GST if decent health care and education were free, as they are in Sweden. Sweden is a much fairer and more balanced society. A GST of 25 per cent is totally unacceptable to most Hong Kong people and would surely kill the tourist industry.

MARY LEE, Fanling