Last edited by Cho-man; 26-02-2015 at 09:14 PM.
Agree that VAT should not be considered - it's an unfair tax because it hurts those that can least afford to pay it. If you try to make it fairer to those lower income the only way you can do it is to put more money in their pockets through grants, so you will have a social security burden which the government is trying to avoid.
Based on the UK experience, you would need an army of field auditors to ensure compliance and tackle tax cheats, another costly administrative measure. Businesses would be placed under another administrative burden to complete input and output VAT returns.
Also, the economic situation is not conducive to another tax. In Hong Kong, consumers are already paying a premium to goods and services, it's the "super profit factor" due to the high rent. We simply cannot afford another amount to the consumer price levels now, the prices are already maxed out because on the high rents.
Hong Kong firstly needs to bring down property costs to minimize the price premium due to high rental costs. We can do this by taxing the max out of profits of commercial property investment and giving additional relief to renters, but care and a gradual approach must be taken to minimize the risk of negative equity to innocent existing residential home owners. In short, we need to ask the property tycoons to pay more, so this idea will never get off the ground until we have a government that is accountable to the electorate. Only when we get rid of the rent premium on consumer prices can we think about further taxes on consumer activity.
Agree with your suggestion to broaden the tax base but any such suggestion should not put pressure on those least able to afford it.
ProbablyOriginal Post Deleted
But even in a country where parking is cheap Chicago raised a US$1B by contracting out the operation of their parking meters. Currently SHKP have a nice deal maintaining Hong Kong's parking meters but the city could probably double the spaces offered and treble the fees pays. This combined with tighter enforcement probably suggests $2b is being left in the gutter.
Revenue from meters is around $330m and hasn't changed for 20 years.
Easty, I often agree with your analysis. But it's a crime to use the words "VAT" and "simple" in the same sentence. Until you have tried to grapple with it as a business, don't. Please. VAT is the death of small business.
And as for VAT on electricity and other essential services..... WHY ffs? That's just about the least progressive kind of taxation one could think of. At least taxing luxury goods would be progressive. Not essentials.
Actually I think if done properly then its quite simple for any business to handle. Malaysia are rolling out a 6% GST starting starting 1st April and I'm setting up my company's ERP system to handle it now and its not that hard. Actually the way they are doing it is similar to Australia with the business activity statement type of report which is admittedly more complex to how its done in Japan, Singapore, Korea, but still pretty easy. China and India on the other hand have completely messed up systems and I agree are difficult to manage but should HK ever decide to make this a reality I don't see any reason why they can't make it as simple as possible.