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tax is made, having thoroughly considered the long- term changes and needs of Hong Kong, then how sales tax could be introduced to enhance the stability of

revenue yield without bringing serious effect on the

livelihood of the general public becomes the key issue

that will have to be considered very carefully.

yield

Sir, in this respect I have the following views: firstly, the consumer goods to be covered by sales tax should be

and carefully selected. According to the Census Statistics Department, last year' private consumption expenditure

amounted to over $200 billion, far exceeding the revenue

required. Therefore, there is a great deal of options

for consumer goods for the levy of sales tax. I think 15 that in order to minimise the impact on the livelihood of

the general public the Government can choose up-market consumer goods for levy of sales tax. [Secondly, the Government may consider applying different rates for

different kinds of consumer goods. Although it is an important principle in the design of sales tax that up-

market consumer goods should be selected for the levy of

the tax, it is inevitable that the user of certain goods may be the ordinary man on the street. The introduction

of a lower tax rate for such goods may minimise the impact on the general public. [Thirdly, consideration

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the rilevy

invaria

26 should be given to granting greater concessions to salary tax upon the introduction of sales tax. imposition of sales tax will inevitably cast the tax net far and wide. This would result in some of the people

who are presently not required to pay salaries tax having to shoulder a certain amount of tax. Yet with careful arrangements its influence on the low-income group 33 will, after all, be limited. But those hardest hit will

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be the middle-income group who are currently paying a

substantial amount of salaries tax. This group of people

are already consumers of dutiable goods and with the

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