| Hong Kong scuttles unpopular proposal for a sales tax on goods and services |
HONG KONG, Dec. 5 (AP) -- Hong Kong's government on Tuesday dumped an extremely unpopular proposal for a sales tax amid complaints that the levy would scare away tourists and hurt the poor.
Officials have spent months pushing the tax plan in a media blitz that included speeches, brochures and TV commercials. Hong Kong currently has no sales tax, and officials argued that the Chinese territory desperately needs to widen its tax base to protect against a potential regional financial crisis, disease outbreaks and other threats.
But the public and many politicians _ including both pro-government and opposition political parties _ in this bastion of capitalism fiercely resisted the proposal for the goods-and-services tax, expected to be 5 percent.
Finance Secretary Henry Tang told reporters on Tuesday that the government would stop promoting the proposal.
"It is clear from the views collected that we have not been able to convince the majority to accept the GST as the main option to address the taxation problem," Tang said.
Tang said that other options would be floated during a public consultation period that ends in March.
The government's coffers are fed by levies on land, business profits, salary taxes and stamp duty. But officials complained it is a narrow revenue base that is too volatile.
But critics said the proposed sales tax would be an unfair burden on the poor and would hurt Hong Kong's image as a shopping paradise for tourists.
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