Financial Secretary Henry Tang yesterday said he was not surprised by the criticism over the proposed goods and services tax (GST). Most people, like elsewhere, have very strong feelings about it, he said.

Tang said this yesterday morning during and after a radio talk program.

He said the government would present more scenarios for public discussion next week over the rate of tax cuts and compensation measures to clear any misconception.

Tang said he was not surprised by the strong reaction from the public and political parties to the government's tax reform proposal.

"Hong Kong is very much like most other economies that upon the discussion of a tax reform, most people will have very strong feelings about it. This is totally within our expectation."

He said the opposition from the three major political parties had been quite expected. He, however, pointed out that these parties and the private sector had misconstrued the proposals and asked them to try to understand the consultation paper first.

Some felt that calculation of the new tax would entail the hiring of an additional two to three accountants for each company. But according to the Singaporean experience, the average compliance cost is only about HK$5,000, he said.

Tang said he hoped the consultation process would give the government a better idea of the areas that people are most concerned about.

"At the same time, it will be a very useful discussion because people will get a better understanding of what is a fair share of tax burden."

To allow people to have a better grasp of the proposals, scenarios of how the tax could be implemented, including different combinations of tax rates and concessions, would be released next week for public discussion, he said.

But Tang stressed that tax concessions would mean reduction in tax bands and rates only. The HK$100,000 personal allowance will remain unchanged so that no fewer people will fall into the tax net. They will only pay less tax, he added.

Later in the morning, Tang met chairmen and vice-chairmen of the 18 district councils, most of which had reservation about the new tax.

They said after the meeting that they were pleased that Tang had been willing to listen to them and promised to send ranking officials to each district to hold further discussions with them.

Meanwhile, Secretary for Financial Services and the Treasury Frederick Ma met representatives from the four major business associations.

Federation of Hong Kong Industries' Vice-Chairman Lau Chin-ho said after the meeting that Ma had pledged more dialogues with the business sector.

Lau said the business sector's main concerns included whether the GST was the only way to broaden the tax base, and whether it would bring any harm to retail, tourism and manufacturing industries.

(China Daily HK Edition July 21, 2006)