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Ambrose Leung

Finance chief keeps his options open, but it is likely the levy will be dropped

Economic conditions and public opinion will be taken into account before the government decides whether to proceed with a land departure tax, according to the financial secretary.

Henry Tang was speaking after leaders of the Democratic Alliance for Betterment of Hong Kong (DAB) met him to demand he scrap plans to bring in the $18 levy.

It looks increasingly likely that the government will have to withdraw the proposal.

DAB, the Democrats and other parties have vowed to block the bill seeking to introduce it.

Mr Tang insisted that any back-down would not affect the government's authority.

'I would consider it from the angle of the overall economy, and ... take into consideration the feelings of the people on whether or not to introduce a specific tax,' Mr Tang said.

He  said the  money the border facilities improvement tax, as it is officially called, could generate would form only a small part of government revenue.

Mr Tang left for Mexico yesterday to attend a meeting of the World Trade Organisation.

Acting Financial Secretary Frederick Ma Si-hang later said the government remained optimistic about the bill's prospects and had no plans to withdraw it. He said the extra revenue it would bring in would help address the budget deficit.

Last year, Mr Tang's predecessor, Antony Leung Kam-chung, announced the proposed levy on out-bound land travellers, saying it would raise at least $1 billion a year.

DAB leaders said after meeting  yesterday that the party would not support the bill's passage because the levy would harm tourism.

Party chairman and Executive Councillor Tsang Yok-sing said it had told Mr Tang that in light of the expected rise in mainland tourism due to the relaxation of travel curbs the tax should be dropped since  it would clash with the policy to encourage tourism.

'Is the extra $1 billion or $800 million [from the tax] so important? We need to strike a balance here. If we want real revenue, the level should be high, but if we set a low rate because we don't want to affect the number of tourists, the amount will too small,' Mr Tsang said.

The party also said it would support delaying the government's target date for  balancing its books by 2006-07.

Mr Tsang said the government should not introduce policies to meet the existing deadline without considering the public interest.



Public views on border tax will be heard: Henry Tang