Introducing a new tax anywhere is politically treacherous. For a government sitting on a sizeable fiscal reserve exceeding $400 billion and whose forecast budget deficits usually turn into actual surpluses, the task is even more fraught. Even though the economy is slowing down, this is a good time to begin a serious discussion of new taxes. Real deficits have materialised over the past few years, although whether structural deficits - recurrent revenue failing to cover recurrent expenditure - will be a persistent problem will not be confirmed until the year end. Any further delays in broadening Hong Kong's very narrow tax base would be irresponsible. At present, the bulk of government revenue comes from taxation from property, personal income and corporate profits, and the tax burden is not evenly spread. Less than 40 per cent of Hong Kong's wage or salary earners now pay any salaries tax. While the salaries tax rate of 15 per cent and corporate profits tax rate of 16 per cent are low by international standards, it would be unfair to raise the rates when that would only mean a heavier burden on existing taxpayers without broadening the tax base. Taxation from property now constitutes about 24 per cent of total taxation, compared with five per cent in most developed countries. But with property no longer the major driving force of the economy, its contribution to government revenue is expected to decline sharply. Besides, the odd situation where earnings from the investment of past budget surpluses have become a significant source of revenue also needs to be addressed. The Government has no reason to hoard too much of our money. But unless an alternative source of steady revenue can be found, spending the reserves will hurt the Government's financial health at two ends, reducing its asset and income at the same time. Predictably, politicians oppose a goods and services tax (GST) on the grounds that it is regressive, hitting the poor harder than the rich, and would be a further drag on the economy. But all objective analyses have shown that the pros of having a GST outweigh the cons. Officials stress that a GST would not aim to raise more revenue, postulating the possibilities of cutting existing taxes after the new tax is introduced. Such reductions would help make the new tax more palatable. But a case could also be made for using the extra revenue to increase spending on education and welfare. At about four per cent of GDP, Hong Kong's spending on education is low by international standards, as are outlays on services for the elderly. If the extra funds raised by a GST could be used to nurture a better educated workforce and take better care of our ageing population, Hong Kong would be a more productive and caring society.