Hong Kong Secretary for Financial Services and the Treasury Frederick Ma said Wednesday that Hong Kong still needs to find other ways to deal with the narrow tax-base problem.

Speaking on a radio talk show on Wednesday morning, Ma said although the Hong Kong Special Administrative Region (HKSAR) government will not advocate the goods and services tax (GST) proposal as the only option in solving the narrow tax-base problem, Hong Kong still needs to look for other ways to tackle it. The SAR government did not make a snap decision, but had discussed the issue several weeks ago.

The secretary said the HKSAR government had already known the public would not easily accept the proposal when it launched the tax-reform consultation. Since most people have strong reservations over the proposal, the HKSAR government decided not to push it.

Noting the HKSAR government's decision fully respects Hong Kong people's wishes, Ma said the consultation process so far has been fruitful since the majority do understand the tax base is narrow and the problem needs to be addressed.

He said the HKSAR government's move will not affect Hong Kong's short-term financial situation. However, the city needs to find other ways to deal with the narrow tax-base problem since the city has an aging population, and there is a continuous rise in public spending.

The tax-reform consultation will continue, Ma reiterated, adding the SAR government will publicize the other options recommended in the 2002 tax-reform report.

Encouraging the public to offer feedback, the secretary said a final report will be submitted next year for the next term government's consideration.

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