New levy strategy will target middle class
The administration will reach out to the middle class directly in the next phase of its GST consultation to seek support for the controversial levy, a government source said.
The comment follows the Legislative Council's endorsement of a joint motion to oppose a goods and services tax.
Although the motion is non-binding, it has prompted the government to adjust its approach in pushing ahead with the levy.
Financial Secretary Henry Tang Ying-yen is scheduled to attend a forum next Tuesday where he will underline the difficulties Hong Kong is facing with a narrow tax base, and how the middle class would benefit from such a levy.
He will also urge political parties to provide viable alternatives to broaden the tax base.
'GST is a middle-class issue,' the government source said, adding that the tax burden was mainly carried by the middle class under the existing tax system.
Other speakers at the forum will include P.C. Woo & Co senior partner Moses Cheng Mo-chi, Federation of Trade Unions' legislator Chan Yuen-han, and Leonard Cheng Kwok-hon, of the Hong Kong University of Science and Technology.
But City University political commentator James Sung Lap-kung said cutting the tax rate would be a better way to keep the momentum of the discussion.
Political parties might soften their stances if the government was willing to drop the GST rate from 5 per cent to 3 per cent. He said the administration had used 3 per cent as a model for a GST years ago.
Executive councillor Anthony Cheung Bing-leung said the government should address the concerns about GST being a regressive tax, by explaining that the poor and working class would not be seriously affected by the levy, which would have an exemption mechanism.
A Democratic Party legislator, who did not want to be named, said he had been told that Chief Executive Donald Tsang Yam-kuen would hint at the possibility of dropping the GST. This was if the community did not support the levy before the chief executive election in March.
