Sales tax necessary to provide financial stability, say accountants

Accountants in Hong Kong back the introduction of a sales tax. They agree with the government and other supporters of the measure that it would ensure financial stability in the long run.

In a report issued yesterday, the Hong Kong Society of Accountants, which has more than 21,000 members, also suggested other measures to broaden the tax base and improve quality of life.

Only about 1.3 million of Hong Kong's 3.2 million working population pays tax.

The government is under pressure to end its recent deficit budgeting. This year's deficit is forecast to hit $78 billion, compared with $62 billion last year.

Tim Lui Tim-leung, the chairman of the society's taxation committee, said a sales tax was necessary to ensure a stable revenue source for the government in the long run. 'The tax base is too narrow for the diverse, complex and sophisticated city that Hong Kong has become,' Mr Lui wrote in the report. 'We cannot continue to rely more and more on a limited number of salaries and profits tax payers and remain competitive.'

Mr Lui said the trend was for countries to move away from direct forms of taxation. He urged the government to start preparing for the introduction of a sales tax.