Presentation of GST_HKBU Public Administration,HKBU/CASS POLS 7050
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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 Presentation of GST_HKBU Public Administration,HKBU/CASS POLS 7050 Presentation Transcript

    • IS GST AN APPROPRIATE MEASURE TO BROADEN THE TAX BASE IN HONG KONG?
    • Agenda
      • Definition of GST
      • Background of GST
      • The Need to Broaden Tax Base
      • Advantage s of Introducing GST
      • Conclusion
    • Definition
      • Goods & Services Tax (GST), can be defined as:
      • “ 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)
    • Background
      • GST is:
      • An Indirect tax
      • Widely implemented, in over 140 countries
    • Background
      • Government Studies on GST in HK:
      • Advisory Committee on New Broad-based Taxes (2000)
      • Internal working group (2003)
      • Public Consultation: “ Broadening the Tax Base, Ensuring our Future Prosperity: What’s the Best Option for Hong Kong? ” (2006)
    • The Need to Broaden Tax Base
      • (1) Highly Volatile Government Revenue
    • The Need to Broaden Tax Base (1) Highly Volatile Government Revenue
      • (2) Dependence on a Minority of Taxpayers
      The Need to Broaden Tax Base Profits Tax Contributions (Corporations) (2006/07)
      • (3) Aging Population
      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
      • (4) Pressure on Public Expenditure
      • Education
      • Public health
      • Elderly care
      • Social securities
      The Need to Broaden Tax Base
    • ADVANTAGE S OF INTRODUCING GST
      • (1) Produce Stable Revenue and Predictable Revenue
      • Broaden the tax base
      •  large amount of domestic consumption
      •  based on consumption expenditure
      • Levied at a low rate
      • Produce significant revenue
      • A multi-stage taxing and crediting mechanism
      •  Avoidance is difficult
      • (2) Cope with Aging Population
      • Challenge of aging population
      •  shrink of the working population
      •  narrow the income tax base
      • Introducing GST
      •  spreading the taxation burden more evenly
      •  give financial support for elderly care, social welfare
      •  cope with the aging population problems
      ADVANTAGE S OF INTRODUCING GST
      • (3) Maintain Hong Kong’s Competitiveness
      • Increasing Salaries Tax and Profits Tax
      •  risk losing mobile labour and capital
      •  challenged by aging population
      • High Corporate Tax
      •  reduce the new investment
      •  restrain economic growth
      • GST (most appropriate)  broaden tax base
      •  avoid relying on Salaries and Profits Taxes
      ADVANTAGE S OF INTRODUCING GST
      • (3) Maintain Hong Kong’s Competitiveness
      • Singapore (GST, 1994)
      •  corporate tax rate (40%, 1986  20%, 2006)
      •  replaced by GST
      • ∴ Maintain Hong Kong’s competitiveness
        • Low-tax environment
        • Attract foreign investment and talent
      ADVANTAGE S OF INTRODUCING GST
      • Need to broaden tax base
      • GST is the best option
      • Produce stable and predictable revenue
      • Cope with aging population
      • Maintain Hong Kong’s competitiveness
      • Retain low-tax environment
      •  attracting foreign investment and talent
      Conclusion
    •  
      • Vaughan M. & Yeung Y. T. Raymond (2006). GST-A Hong Kong Perspective . Hong Kong: CCH Hong Kong Limited.
      • Schenk A. & Oldman O. (2007). Value Added Tax: A Comparative Approach . USA: Cambridge University Press.
      • 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
      • Financial Services & The Treasury Bureau (2007). Public Consultation on Tax Reform Final Report . From http://www.taxreform.gov.hk/eng/doc_and_leaflet.htm.
      • Hong Kong Yearbook (1997-1999, 2008). From http://www.yearbook.gov.hk.
      References