IS GST AN APPROPRIATE MEASURE TO BROADEN THE TAX BASE IN HONG KONG?
Agenda <ul><li>Definition of GST </li></ul><ul><li>Background of GST </li></ul><ul><li>The  Need to Broaden Tax Base </li>...
Definition <ul><li>Goods & Services Tax (GST), can be defined as: </li></ul><ul><li>“ the tax a person pays on the value o...
Background <ul><li>GST is: </li></ul><ul><li>An Indirect tax </li></ul><ul><li>Widely implemented, in over 140 countries <...
Background <ul><li>Government Studies on GST in HK: </li></ul><ul><li>Advisory Committee on New Broad-based Taxes   (2000)...
The Need to  Broaden Tax Base   <ul><li>(1) Highly Volatile Government Revenue   </li></ul>
The Need to  Broaden Tax Base   (1) Highly Volatile Government Revenue
<ul><li>(2)  Dependence on a Minority of Taxpayers </li></ul>The Need to  Broaden Tax Base   Profits Tax Contributions (Co...
<ul><li>(3)  Aging Population </li></ul>The Need to  Broaden Tax Base   Age Group Percentage of Total 1996 2001 2006 2008 ...
<ul><li>(4)  Pressure on Public Expenditure </li></ul><ul><li>Education </li></ul><ul><li>Public   health   </li></ul><ul>...
ADVANTAGE S  OF  INTRODUCING GST <ul><li>(1)   Produce Stable Revenue and Predictable Revenue </li></ul><ul><li>Broaden th...
<ul><li>(2) Cope with Aging Population </li></ul><ul><li>Challenge of aging population  </li></ul><ul><li> shrink of the ...
<ul><li>(3) Maintain Hong Kong’s Competitiveness </li></ul><ul><li>Increasing Salaries Tax and Profits Tax </li></ul><ul><...
<ul><li>(3) Maintain Hong Kong’s Competitiveness </li></ul><ul><li>Singapore (GST, 1994) </li></ul><ul><li>   corporate t...
<ul><li>Need  to broaden tax base </li></ul><ul><li>GST is the best option </li></ul><ul><li>Produce stable and predictabl...
 
<ul><li>Vaughan M. & Yeung Y. T. Raymond (2006).  GST-A Hong Kong Perspective . Hong Kong: CCH Hong Kong Limited. </li></u...
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Presentation of GST_HKBU Public Administration,HKBU/CASS POLS 7050

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"Is GST an Appropriate Measure to Broaden the Tax Base in Hong Kong?”

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Presentation of GST_HKBU Public Administration,HKBU/CASS POLS 7050

  1. 1. IS GST AN APPROPRIATE MEASURE TO BROADEN THE TAX BASE IN HONG KONG?
  2. 2. Agenda <ul><li>Definition of GST </li></ul><ul><li>Background of GST </li></ul><ul><li>The Need to Broaden Tax Base </li></ul><ul><li>Advantage s of Introducing GST </li></ul><ul><li>Conclusion </li></ul>
  3. 3. Definition <ul><li>Goods & Services Tax (GST), can be defined as: </li></ul><ul><li>“ the tax a person pays on the value of the good or service that a person purchases, which has been prescribed as taxable, within a country or region, from a registered supplier .” (Vaughan & Yeung) </li></ul>
  4. 4. Background <ul><li>GST is: </li></ul><ul><li>An Indirect tax </li></ul><ul><li>Widely implemented, in over 140 countries </li></ul>
  5. 5. Background <ul><li>Government Studies on GST in HK: </li></ul><ul><li>Advisory Committee on New Broad-based Taxes (2000) </li></ul><ul><li>Internal working group (2003) </li></ul><ul><li>Public Consultation: “ Broadening the Tax Base, Ensuring our Future Prosperity: What’s the Best Option for Hong Kong? ” (2006) </li></ul>
  6. 6. The Need to Broaden Tax Base <ul><li>(1) Highly Volatile Government Revenue </li></ul>
  7. 7. The Need to Broaden Tax Base (1) Highly Volatile Government Revenue
  8. 8. <ul><li>(2) Dependence on a Minority of Taxpayers </li></ul>The Need to Broaden Tax Base Profits Tax Contributions (Corporations) (2006/07)
  9. 9. <ul><li>(3) Aging Population </li></ul>The Need to Broaden Tax Base Age Group Percentage of Total 1996 2001 2006 2008 0-14 18.5 16.5 13.7 12.7 15-24 14.0 13.7 13.2 12.9 25-34 19.1 16.5 15.3 15.3 35-44 19.0 20.3 18.2 16.9 45-54 11.0 14.3 17.4 18.2 55-64 8.3 7.5 9.7 11.3 65+ 10.1 11.1 12.4 12.8
  10. 10. <ul><li>(4) Pressure on Public Expenditure </li></ul><ul><li>Education </li></ul><ul><li>Public health </li></ul><ul><li>Elderly care </li></ul><ul><li>Social securities </li></ul>The Need to Broaden Tax Base
  11. 11. ADVANTAGE S OF INTRODUCING GST <ul><li>(1) Produce Stable Revenue and Predictable Revenue </li></ul><ul><li>Broaden the tax base </li></ul><ul><li> large amount of domestic consumption </li></ul><ul><li> based on consumption expenditure </li></ul><ul><li>Levied at a low rate </li></ul><ul><li>Produce significant revenue </li></ul><ul><li>A multi-stage taxing and crediting mechanism </li></ul><ul><li> Avoidance is difficult </li></ul>
  12. 12. <ul><li>(2) Cope with Aging Population </li></ul><ul><li>Challenge of aging population </li></ul><ul><li> shrink of the working population </li></ul><ul><li> narrow the income tax base </li></ul><ul><li>Introducing GST </li></ul><ul><li> spreading the taxation burden more evenly </li></ul><ul><li> give financial support for elderly care, social welfare </li></ul><ul><li> cope with the aging population problems </li></ul>ADVANTAGE S OF INTRODUCING GST
  13. 13. <ul><li>(3) Maintain Hong Kong’s Competitiveness </li></ul><ul><li>Increasing Salaries Tax and Profits Tax </li></ul><ul><li> risk losing mobile labour and capital </li></ul><ul><li> challenged by aging population </li></ul><ul><li>High Corporate Tax </li></ul><ul><li> reduce the new investment </li></ul><ul><li> restrain economic growth </li></ul><ul><li>GST (most appropriate)  broaden tax base </li></ul><ul><li> avoid relying on Salaries and Profits Taxes </li></ul>ADVANTAGE S OF INTRODUCING GST
  14. 14. <ul><li>(3) Maintain Hong Kong’s Competitiveness </li></ul><ul><li>Singapore (GST, 1994) </li></ul><ul><li> corporate tax rate (40%, 1986  20%, 2006) </li></ul><ul><li> replaced by GST </li></ul><ul><li>∴ Maintain Hong Kong’s competitiveness </li></ul><ul><ul><li>Low-tax environment </li></ul></ul><ul><ul><li>Attract foreign investment and talent </li></ul></ul>ADVANTAGE S OF INTRODUCING GST
  15. 15. <ul><li>Need to broaden tax base </li></ul><ul><li>GST is the best option </li></ul><ul><li>Produce stable and predictable revenue </li></ul><ul><li>Cope with aging population </li></ul><ul><li>Maintain Hong Kong’s competitiveness </li></ul><ul><li>Retain low-tax environment </li></ul><ul><li> attracting foreign investment and talent </li></ul>Conclusion
  16. 17. <ul><li>Vaughan M. & Yeung Y. T. Raymond (2006). GST-A Hong Kong Perspective . Hong Kong: CCH Hong Kong Limited. </li></ul><ul><li>Schenk A. & Oldman O. (2007). Value Added Tax: A Comparative Approach . USA: Cambridge University Press. </li></ul><ul><li>Advisory Committee on New Broad-based Taxes (2002). Final Report to the Financial Secretary . From http://www.fstb.gov.hk/tb/acnbt/english/finalrpt/btreport.pdf </li></ul><ul><li>Financial Services & The Treasury Bureau (2007). Public Consultation on Tax Reform Final Report . From http://www.taxreform.gov.hk/eng/doc_and_leaflet.htm. </li></ul><ul><li>Hong Kong Yearbook (1997-1999, 2008). From http://www.yearbook.gov.hk. </li></ul>References

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