The controversial sales tax proposal might be considered if the decline in government revenue persists, the Chief Secretary for Administration said yesterday.
Anson Chan Fang On-sang warned that profits tax, salaries tax and land premiums, which make up half of government income, had been shrinking.
'We have been concerned that revenue from these sources has decreased. What we are in the throes of examining is whether this reduction in revenue is a cyclical occurrence or structural defects in our tax systems,' she said.
'If the latter, we do have to put on our thinking cap and see what is the best way of broadening our tax base.' Speaking to the Australian Chamber of Commerce, Mrs Chan said sales tax was not uncommon worldwide and it was in this context that the proposal was being examined.
The South China Morning Post reported on Tuesday that Financial Secretary Donald Tsang Yam-kuen would announce a sales tax in his March Budget.
Chief Executive Tung Chee-hwa told legislators on Wednesday that a prolonged budget deficit might scare away investors.
