Standard & Poor's says government revenues are volatile
The Hong Kong government should consider broadening its tax base to stabilise revenue, according to international credit ratings agency Standard & Poor's.
It said Hong Kong's fiscal deficit would be eased by improving employment figures, the revival of the property sector and renewed strength in the stock market, but added that the structure of the tax regime remained a key concern.
'Hong Kong government revenues are very volatile,' said Paul Coughlin, Standard & Poor's managing director for Asia-Pacific corporate and government ratings. 'The problems we've seen in the past few years will come back if there is another recession because of the narrow tax base.'
Accountants have suggested the introduction of a goods and services tax as a means to cut the budget deficit, which reached $40 billion in the 2003-04 financial year.
Revenue from salary and property taxes has fallen in recent years as the property market and the general economy has stumbled.
