Hong Kong's public finances will be more susceptible to shocks without a goods and services tax and its creditworthiness might suffer, analysts warn. Stabilising tax revenues was vital over the longer term, said Kim Eng Tan, Standard & Poor's ratings services associate director. Fitch Ratings associate director for Asia sovereign ratings, Vincent Ho Weng-sun, was disappointed by the decision. 'We do not welcome this announcement. We had strong expectations that the GST would be implemented,' he said. Neither agency believes the decision will affect Hong Kong's creditworthiness in the short term as economic growth, forecast at 6.5 per cent for this year, remains fairly robust. Hong Kong has an AA- long-term foreign currency rating from Fitch and an AA long-term credit rating from Standard & Poor's, just shy of the highest rating of AAA. The higher the rating, the less the government pays for loans. The International Monetary Fund is also an advocate of the tax as a means for Hong Kong to improve its financial health. Bankee Kwan Pak-hoo, chairman of the Hong Kong Retail Management Association, welcomed the decision, saying it would boost retail spending and investment as well as the labour market. The development is expected to focus attention on other ways to broaden the tax base before the public consultation ends in March. The government had said the GST would be revenue-neutral and be accompanied by income tax cuts and other relief measures. Richard Chow Yeung-tuen, president of the Taxation Institute of Hong Kong, said options included reducing the personal allowance of HK$100,000, an environmental tax and a tax on dividend income. He said these options were easier to sell to the public but less effective than a GST in broadening the tax base. Public opposition to the GST has grown, especially in the current economic climate, which has seen stock prices soar and corporate profits rebound, boosting personal wealth. Prospects of a repeat of the Asian financial crisis in 1997 also seem remote and, with Hong Kong almost fully recovered from the Sars outbreak, the call for a new tax has largely fallen on deaf ears. 'A new tax, especially one designed to raise more revenue and create more spending, is untenable in these circumstances,' said Mark Mullins, executive director of Canada's Fraser Institute.