AT least five Legislative Councillors have service companies, a Sunday Morning Post survey has revealed, but all deny the firms were established to avoid tax. The legislators include two doctors - the profession targeted by the Government as one of the main users of service companies to reduce taxation. They are Meeting Point's Dr Leong Che-hung and United Democrat Dr Huang Chen-ya. The others include two accountants, the Liberal Party's Peter Wong Hong-yuen and independent Eric Li Ka-cheung, as well as veteran legislator Jimmy McGregor. While all five denied purposely avoiding tax, they hit out at the Government for giving the impression that tax avoidance was illegal or unethical. They also accused the Government of misleading the public in linking service companies to tax avoidance. Financial Secretary Sir Hamish Macleod announced in his Budget earlier this month that he would crack down on those service companies guilty of cheating on tax payments. But all of the legislators concerned insisted their firms were solely for financial and commercial convenience. ''This is part of my profession,'' said Mr Li, who has owned several service companies since he began as an accountant. But he admitted to receiving a holiday package and a director's fee amounting to one-fifth of his total income from the companies. ''This is something very natural if a company is profitable,'' he said. Dr Huang also admitted to claiming overseas travel expenses from his company. ''I claim the expenses when I attend medical meetings - this is part of my work,'' he said. The United Democrat has owned two service companies for seven years, one to manage his clinic, the other for investment and property. He claimed he had no idea whether his companies reduced his tax payment, but said: ''My accountant said this is the bestarrangement.'' Mr McGregor said he earned a modest income through his service company, a business consultancy called J .D. McGregor Ltd, which he set up after leaving the Hong Kong General Chamber of Commerce in 1988. But the legislator said it was unlikely his companywould fall into the Government's target category. ''They are talking about those used by an employee working for one employer, not those where a person is working for a number of companies,'' he said. Mr Wong and Dr Leong both said they received no income or expenses and added they would not change their present arrangements unless they were forced to by the proposed legislation. ''Unless the law states that all professionals, such as lawyers, accountants and doctors have to pay salaries tax, I won't change my present practice,'' said Mr Li. While maintaining their service companies were not set up to avoid tax, the legislators criticised the Government for giving the impression that tax avoidance, as opposed to evasion, was unethical. ''It is absolutely legal at the moment,'' said Dr Huang. Mr Wong added: ''Everyone wants to minimise his tax payment in a legal way. There is nothing wrong with that.'' All wanted to join the Bills Committee, which will study the legislation implementing the crackdown. ''I will definitely join the related committee - I have a lot of knowledge on the issue,'' Mr Li said. But a senior government official was last week quoted as warning there might be a conflict of interest if legislators with service companies became too closely involved in scrutinising the tax avoidance bill - a statement which provoked an angry responsefrom councillors. ''It's not for the administration to say you cannot do that,'' said Dr Leong. ''If I vote in [a way that is a] conflict of interest, the media and public will be able to judge.'' Mr Li claimed that the Government did not seem to have a clear idea of what sort of service companies it was targeting when it announced the crackdown. ''I've asked for clarification on the issue on an almost daily basis, but there is still no reply,'' he said. Mr Li said the use of service companies was a common commercial practice in many countries. ''Hong Kong is not the only one,'' he said. According to this year's declaration of interests register for legislators, Stephen Poon Kwok-lim and James To Kun-sun also own their homes through limited companies. In addition, similar registers for the previous two years show the following councillors own property through limited companies: United Democrats Martin Lee Chu-ming and Dr Conrad Lam Kui-shing, Howard Young and Ronald Arculli of the Liberal Party, as well as independents Chim Pui-chung and Tang Siu-tong.