BUDGET 2015: A decade on, the controversial goods and services tax rears its head once more
John Tsang suggests reviving unpopular consultation that his predecessor was forced to shelve a decade ago
The controversial goods and services tax reappeared in this year’s budget, with the finance chief saying the city “may explore the feasibility” of the levy that his predecessor reluctantly shelved almost a decade ago.
Now, as then, major parties across the political spectrum showed no hesitation in questioning the idea.
It is the first time Finance Secretary John Tsang Chun-wah has ever explicitly mentioned GST in his eight budget speeches to date, but government sources downplayed the move, saying it is anything but a firm pledge to relaunch the political powder keg. His predecessor, Henry Tang Ying-yen, was forced to shelve the consultation in 2006, amid wide public opposition.
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“[The] government launched an extensive consultation on the introduction of a goods and services tax in 2006. The community then did not support [it[,” Tsang said in his budget speech today. “We may explore again the feasibility of broadening the tax base in due course with the aim of stabilising government revenue and creating room for direct tax concessions.”
The sudden citation of the almost-forgotten subject is widely seen as a tactic for the government to illustrate the difficulty of significantly increasing revenue in face of mounting calls for universal pension.
Two leading pro-government lawmakers questioned Tsang’s potential move on GST, already in place in many countries throughout the region.
“I am concerned that the controversy would emerge again,” said Tam Yiu-chung, chairman of the Democratic Alliance for the Betterment and Progress of Hong Kong.
Federation of Trade Unions’ Chan Yuen-han also expressed concerns about the government putting forward the contentious plan again and said the government should instead consider capital gains tax.