Consideration On The Problems In Introducing A Goods And Services Tax In Hong Kong

On 18 July 2006, Financial Services and the Treasury Bureau of The Government of the Hong Kong Special Administrative Region issued a consultative document for the introduction of a Goods and Services Tax ("GST") and had set a nine-month consultation period. This consultation terminated on 31 March 2007, and the final report was issued in June of the same year, while no conclusion for whether the GST will be introduced or not, and when will it be introduced if it is the case. It only indicated even if carries out, it should be in 2009 or later.The merit of Hong Kong tax system is simple and low tax rate but tax base is narrow, to increases income, perhaps introduces GST is helpful on the source. However, some industries worried about the negative influences once the GST is introduced to broad the tax base, for example decreased residents' consumption and increases the polarization of the rich-poor; small and medium-sized enterprises also worried that introducing GST may increase their cost and difficulty of operation. Both affirmative and opposition side has their own ideas with substantial supporting.This thesis analyze the merit and weak of existing tax system in Hong Kong, the problems comes from the narrow tax base, and the advantages and disadvantages of individual options for broaden the tax base including the GST and its influences on Hong Kong economy. Then consider the problem and achievement of the countries which introduced GST, compare with Hong Kong plus individual consideration, thus find out the solution of problems caused from GST to increase its feasibility.