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Treasury chief touts stability of GST as income source

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Updated at 1.49pm: A goods and services tax (GST) will provide a more stable revenue source than other taxes, argues Secretary for Financial Services and the Treasury Frederick Ma Si-hang .

Mr Ma told the Legislative Council on Wednesday afternoon that revenue from other taxes often fluctuated ? particularly when the economy was in recession. But revenue from a GST was much less volatile.

?While personal consumption generally falls during economic downturns, its fluctuations are smaller than those of real estate, business profits and salary income,? Mr Ma said. ?Therefore, the consumption-based goods and services tax could provide a more stable revenue source for the government than our existing major revenue sources.?

Mr Ma?s speech in Legco comes after considerable opposition from different sectors in Hong Kong since the government launched a public consultation on the controversial tax in mid-July.

Critics of the GST contend it will be regressive and hurt low-income earners. They argue it will push up Hong Kong?s cost of living and hurt tourism and may complicate Hong Kong?s simple tax system.

But the financial services secretary said economic models used by the government had shown the benefits of a GST. The models had been based on Hong Kong?s economic situation in the past eight years.

They had forecast the potential revenue that could be generated by a GST.

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