Hong Kong drops plans to introduce GST

Just as the GST debate in Singapore seems to be petering out, Hong Kong — the very economy that Singapore is often trying to emulate — yesterday shelved its plans to introduce a 5 per cent GST in the face of strong public opposition. It is notable that this decision was reached after a long 9 month public consultation. In Singapore’s case, there was no public consultation at all. Just an announcement in Parliament which Singaporeans are expected to meekly accept. Perhaps it is not just the government that is to be faulted, but us citizens as well for too easily accepting whatever will be, will be.

Hong Kong shelves controversial sales tax plan

HONG KONG (AFP) – Hong Kong is to drop plans to introduce a goods and services tax (GST) after it failed to win enough public support for a change in the city’s famously low tax environment.

Financial Secretary Henry Tang said the decision was reached after an ongoing public consultation showed that the controversial plan lacked public support.

“It is clear from the views collected that we have not been able to convince the majority to accept GST as the main option to address the tax base problem,” he said.

“So we accepted that at this time we do not have the public support nor the conditions for introducing a GST. For the remainder part of the consultation we will not be advocating GST as the only option,” he told reporters.

Tang did not take questions nor clarify whether the government will re-consider the policy in the future.

He said the government will stop promoting the plan over the remainder of the nine-month consultation period and urged citizens to continue to provide their views on the other possible ways to widen the tax base.

Hong Kong leader Donald Tsang said the decision has complete support from him and the Executive Council, or cabinet.

“We believe that the decision (Tang) has made respects fully the wishes of Hong Kong people that we should seriously consider widening our tax base,” he said.

“At the same time he has paid full regard to the strong opposition of the people to the introduction of GST at this time,” he said.

Tsang Yok-sing, Executive Councillor and the founding chairman of the pro-Beijing Democratic Alliance for the Betterment of Hong Kong (DAB), also welcomed the move.

“We opposed the GST but also believe that we should find other ways to widen the tax base … we welcome that the government has listened to the public views,” he said.

The proposal has met public hostility with protests denouncing the plan throughout the consultation period. All major political parties opposed the measure.

Activists had accused Tang of robbing the poor to pay the rich, with protesters saying a sales tax would decimate the booming tourism industry by making shopping in Hong Kong — one of its biggest draws — less attractive.

Author: Gerald Giam

Gerald Giam is the Member of Parliament for Aljunied GRC. He is a member of the Workers' Party of Singapore. The opinions expressed on this page are his alone.

10 thoughts on “Hong Kong drops plans to introduce GST”

  1. I beg to differ that Singaporeans are simply accepting – Singaporeans have no channel to feedback – which I think is what the PAP wants. (Forget ST on this issue, I’m referring to a real channel, not one that accepts letters that by large coincide with government interests.)

    With no proper channel to feedback, Singaporeans may not be able to gauge fellow citizens’ opinions on issues to ascertain whether to accept or not. I would think, our only practical forms of feedback is through rallies (which everyone knows the circumstances) and online petitions (which I think is useless).

    Not to say that the government did not consult before – they had a pseudo-consultation on the casino which didn’t turn out that well. imo, the PAP’s power is from withholding and disseminating different types of information. It’s a double-edged sword for them though – extremely difficult to gauge the ground during elections, as seen in elections ’06.

  2. Hi thor,

    You raised a good point that if people don’t know what others are thinking, they won’t be able to say, “Yah man! I also disagree with that policy!”. This is the intended result of the govt’s muzzling of the mainstream media.

    I didn’t mean that all Singaporeans are accepting. The blogging community certainly isn’t. But if you talk to the man/woman on the street, most likely you’ll get the reaction, “What to do? Gahmen already decided, right?”

    I think we have more than enough channels for feedback. Even if you don’t count newspaper forum pages, we have REACH (a.k.a. Feedback Unit), online consultation papers, and we can also lobby our own MPs either individually or as a group. I would consider even blogs a viable feedback channel, as I know the govt monitors their contents to gauge ground sentiment. For all these channels, there is nothing stopping us from submitting feedback (unlike the Forum, where an editor filters out unpalatable letters). But there are several problems:

    1. Our govt hears but only listens selectively, depending on whether feedback is in line with what they have already decided.

    2. They see no need to accede to popular opinion, because we have given them such a huge mandate at the polls to do as they please.

    3. We have a weak and divided opposition, which isn’t a threat to the govt’s position.

    4. Our people have been de-politicized and conditioned to believe (consciously or sub-consciously) that it is socially deviant to voice any kind disagreement with govt policies. So most people shy away from any public comments, either because they are disinterested or they are fearful of the consequences. You’ll be surprised how many shocked reactions I get when I tell people about what I blog about.

    I think the PAP has a better gauge of the ground sentiment than we realise. In any case, it is to their opponent’s advantage if they don’t keep in touch with the ground.

    Thanks for your comment.

  3. Hong Kong’s consultation excerise with regards to their proposed gst hike is inspiring. It’s democracy at its best. If our government desires to create an “inclusive” society and have the desire to engage with citizens, I think they should seriously organise public consultation exercises with regards to the gst hike. These should be genuine and not like those pseudo casino consultations they had previously. People are not blind, they can tell if such consultations are genuine or not.

  4. The problem is the govt does think Singaporeans are blind, irrational, illogical and overly given to emotion when it comes to discussions on public policies.

    It was reported in TODAY that AWARE complained that 1 month was insufficient time to do submit comments on the govt’s consultation on the revised Penal Code. I too wanted to submit my comments after finishing all my GST articles, but ran out of time and the consultation period closes today.

    The govt needs to see these consultation exercises (when they do have it) as more than just a PR stunt.

  5. the problem with Singaporeans is that we cannot handle power.

    What do i mean? Freedom (to choose, to speak) has been withheld for so long, now that the govt gives some leeway, we go overboard. and thus having to have them to step in again and remove that freedom.

    Look at (R) movies, plays…Hong Lim Park, the blogosphere. its a shame that blogs like Rockson came up and made a mockery of the freedom to speak. its also a shame it became one of the most popular blogs. Thank God he’s stopped posting.

    The other extreme – When we’re given the opportunity to choose – what do we do? we complain. and often its the vocal minority that gets away with the complaining.

    We are still immature as a democracy – we cannot handle debates well. So dont blame the govt if they think they need to control us.

    Aygee

  6. Aygee,

    I agree that some Singaporeans don’t conduct themselves well, but I think it’s a sweeping statement to say that all Singaporeans cannot handle power.

    Just visit the websites listed under my “Good reads” section. I think it should give you some hope for our maturing democracy.

    You mentioned a few examples. Perhaps you could elaborate why you feel those examples you cited showed that we have gone overboard with our new freedoms?

    About the complaining part, yes, I agree that Singaporeans seem to complain more than they should. If you turn to the ST Forum, all you see are complaints. Why? Because the Forum editor seldom publishes letters that are strongly critical of government policy, leaving only those silly “my void deck is so dirty, what is the town council doing about it” letters.

    cheers,
    Gerald

  7. You’re right. I may have over-generalised about Singaporeans not able to handle the freedom, but for as long as i can remember, whenever the govt gives some leeway, it gets abused to the point the govt has to backtrack.

    R movies – the moment govt allowed it, many theatres started showing soft porn and labeling them as R. people started complaining, and then the govt had to backtrack and finetune.

    Plays – many plays started becoming highly political when the govt relaxed on the rules. what happened? they had to backtrack and apply tighter rules to govern what is acceptable.

    Hong Lim Park – the original idea was to create a Hyde Park. If you’ve been to Hyde Park, it has a good mix of political, religious, racial and even funny mindless banter going on for a typical Sunday. Hyde Park becomes a nice tourist attraction, a perfect Sunday in London. But what happened? It became a highly “acidic” political platform. so much so the govt had to backtrack.

    All this again leads me to think we’re not matured yet as a nation, as a people. That the govt has to step in and regulate.

    but then again, it becomes a vicious cycle, doesnt it?

    You can see i’m a bit hung up on the “matured civic society” bit :-)

    oh anyway, keep up your engaging views.

    Aygee

  8. Thanks for elaborating on your examples.

    I agree in general that we have a long way to go before we can say we have a “mature civic society”. But give us some time and leeway and I think we can make it happen.

    I think a bit of regulation is fine. It’s a question of what the govt steps in to regulate. I give you two examples: The racist bloggers and mrbrown. I feel that the racist bloggers deserved their punishment for their irresponsible writings. But the govt’s cracking down on mrbrown was out of line. In fact the govt’s justifications demonstrated their own immaturity in handling public discussion.

    I think both the govt and the people need to play their part in maturing our civic society. The govt needs to lighten up a bit, and we the people need to treat our freedoms seriously.

    cheers,
    Gerald

  9. Culling the white horse in property taxes: The Odd Imperfection in a 1st world economy.
    I cannot help notice a glaring omission in the proposed SG budget 2007. GST isn’t the only solution and property taxes need urgent review if we are to remain a 1st world economy.

    Here are my basic observations (and their resources).
    1) I believe in “Staying Together, Moving Ahead”- http://www.pap.org.sg/articleview.php?id=589&mode=&cid=25 , I supported that manifesto during the recent election as being human, we have to learn to live together.

    2) All SGporeans are united perform some form of NS as parents, males etc, so ALL should be entitled to affordable space/ resources to grow their dreams. In terms of residences, food and economic opportunities etc.

    3) Increasing the Rich poor divide will only result in social fragmentation, crime, suspicion culminating in demise of SG.
     Land is often a source of social discord/ war.

    4) It is our elected govt’s responsibility to maintain SG [maybe too: the world at large] in a state of sustainable social development/ economy, and efficient land allocation is paramount.

    5) Everything scarce/ ‘remotely evil’ in ‘squeaky clean’ Singapore must thus be rationed to allow access by all (where appropriate), strategic taxes are a way to achieve this: e.g. : income tax, road tax, GST, ERP,
    i) Income tax rates: http://www.mof.gov.sg/taxation/indiv_income_tax_rates.html
    ii) Road tax rates: http://www.onemotoring.com.sg/publish/onemotoring/en/lta_e_services/online_enquiries/road_tax_calculator/road_tax_calculation.html
    iii) Tobacco taxes stand at >64%: http://www.hpb.gov.sg/hpb/default.asp?pg_id=1030#a_keystrategies

    6) The current system of unlimited housing tax concessions is unfair, outdated and unsustainable. At a merely 4% for ANY size of property, it encourages the rich & elitist to speculate/ hoard property at the expense of the majority SGporean: http://www.iras.gov.sg/ESVPortal/pt/pt_d.1.d.6_what+are+the+claims+available+for+residential+properties.asp. And to further the elitist joy: ‘Property Tax haven policy’: another elitist oddity where elites can enjoy S$900K tax exemption: http://forums.hardwarezone.com/showthread.php?t=1512965 (well the existence of estate taxes is another ST forum unanswered: oddity)- Estate duty: Exemption should cover all assets (ST forum: 19.1.07): http://groups.google.com.sg/group/soc.culture.singapore/msg/f258c7cdf9cc2577?hl=en&

    7) If land isn’t a limited commodity in SG then what is? Security spending in SG2006 budget was $12.81b or 41.8% : http://www.mof.gov.sg/budget_2006/expenditure_estimates/attachment/Overview_EE2006.pdf , so should the elite continue to be allowed to hoard/ speculate over vast land areas for a song?

    8) Recently: an HDB flat (govt housing) is getting shockingly expensive and property costs in SG are evading the reach of the common man: due to govt oversight?
    i) A Marine Cres HDB apt (117sq m) is sold for $495K: http://www.hdb.gov.sg/bb33/ispm051p.nsf/Search , http://www.sgforums.com/?action=thread_display&thread_id=236234
    ii) The median gross monthly income of the average Singaporean was $2,170 as at June2006: http://www.todayonline.com/articles/170264.asp
    iii) SLA does little to control speculative rises and land costs; HDB sidesteps the issue of land costs whilst emphasizing how popular HDB flats are :
     Quote: Ms Kee Lay Cheng, Dy Dir, Marketing & Projects, HDB (ST forum 10.1.07) “Mr Leong … has missed the point. To understand the full extent of public-housing subsidy for new HDB flats, one should be comparing the market value of the flats with the sale prices charged by HDB, rather than look at the input costs of land and building… … … …” http://forums.delphiforums.com/n/mb/message.asp?webtag=sammyboymod&msg=129387.1

    9) Proper governance is guided by justice and equality which dictates that progressive taxation forms the backbone of tax policy: http://en.wikipedia.org/wiki/Progressive_tax – . yet it really seems to me that the SG govt ganging up with speculators to profit from land sales: Speculators enjoy low property taxes, gov collects the revenue from expensive land sales. Will HDB eventually breed a population of home debtors? It’s sad when the govt seems so myopic…

    10) GST is a regressive tax that does no favor to the poor. ‘The higher cost of living will hit the poor harder’ http://newpaper.asia1.com.sg/printfriendly/0,4139,122804,00.html and the rich may avoid paying GST on expensive items bought via eBay/ holidays to regional countries etc- methods which the poor have little access.

    11) The gov must honor its manifesto via creating a sustainable platform for the equitable of land distribution in Singapore.

    12) Truth is that land and property are both limited resources and its gov duty to ensure its equitable distribution.
    i) There is also anticipated increased demand for more housing options in SG both by expatriates, FTs as well as Singaporeans who need basic living space to maintain elderly folk, children and other special needs.
     Population is rising: ‘planning for a population of 6.5 million’: http://www.channelnewsasia.com/stories/singaporelocalnews/print/257659/1/.html
     Foreigner get to ‘can rent HDB flats at a lower rate’: http://www.expatsingapore.com/startup/shift.htm , http://www.jtc.gov.sg/products/readybuilt/housing/apt/pages/apartforrent.aspx
     Pte property in demand: Foreign purchases of private residences here hit an all-time high of 4,595 last year http://groups.google.com.sg/group/soc.culture.singapore/msg/a29e9bb01e9032f7?&hl=en

    13) Social disorder?: something tells me that PAP gov has in someway orchestrated this whole ‘dependency programme’ (rooted in the PAP kiasu mentality). To the elite: Land hoarding remains a tax haven and a means of manipulating the poor in society.
    i) It has been reported that the SG govt’s public assistance schemes are complicated and clumsy:
     ‘Another $70m for ComCare: Fund helped 90,000 needy S’poreans in first 18 months, … which disbursed $2.7 million through grassroots leaders…. 5,500 grassroots leaders were also trained to provide interim assistance to families in financial difficulty’ http://www.todayonline.com/articles/170947print.asp yes: SGporeans are so dependent on PAP handouts… but what about making them less debt laden in the first place via proper regulation of land use in SG?
    ii) The Adventures of Elite Girl, …” … please, get out of my elite uncaring face.” (19 Oct, 2006) saga: http://intelligentsingaporean.wordpress.com/wee-shu-min/ , Peanuts: http://en.wikipedia.org/wiki/Tan_Choo_Leng , NKF saga http://app.mof.gov.sg/cutwaste/suggestionview.asp?id=25856
    iii) No democracy in elections: Downsize super GRCs (23Dec2005): http://newpaper.asia1.com.sg/printfriendly/0,4139,99258,00.html?
    iv) Singaporeans can write to CPF Board to appeal for higher Progress Package payout (3.4.06) : Mr Mah explained that while this may not be the best way of measuring their wealth, it is administratively simple: http://sg.news.yahoo.com/060403/5/singapore201170.html
    v) 67,000 Singaporeans fail to sign up for Progress Package payouts: http://www.channelnewsasia.com/stories/singaporelocalnews/view/254970/1/.html
    vi) Singapore’s birth trend outlook remains dismal (7.2.07): http://www.channelnewsasia.com/stories/singaporelocalnews/view/257208/1/.html – bolder changes in family policies are needed to help Singapore replace its rapidly ageing and dwindling population.
    vii) Singaporeans need assurance over growing population: sociologist (9.2.07) Prof: it’s also important that as Singapore attracts more foreigners here, it should also take measures to retain its citizens. http://www.channelnewsasia.com/stories/singaporelocalnews/view/257677/1/.html
    viii) Help middle income workers by relaxing Workfare criteria: unions (9.2.07): “in the pa
    st, even when the income tax was lowered, they had lower CPF as well. That, somehow, did not equal out to more benefits …”: http://www.channelnewsasia.com/stories/singaporelocalnews/view/257618/1/.html
    ix) Social Development Sector comprises six Ministries … accounts for 41.8% govt expenditure in FY06.- http://www.mof.gov.sg/budget_2006/expenditure_overview/social_dev.html
    x) Middle class wage stagnation could lead to social instability (11.1.07) http://www.channelnewsasia.com/stories/singaporelocalnews/view/251939/1/.html
    xi) This is a system based on government taking everything away from the people: http://www.sgforums.com/?action=post_display&post_id=5963404
    xii) SM call to wealthy : Give 0.5% of annual pay to needy: http://singaporecommentary.blogspot.com/

    14) “Staying Together, Moving Ahead”- the ease of implementation and the benefits gained from progressive, ‘individualized’ land/ property taxes are as follows:
    i) Benefits:
     Greater tax contribution by those who can afford, and choose to live luxuriously in our safe and cosmopolitan city (defended and maintained by ALL Singaporeans):
     Greater emphasis on family as prop tax calculations would benefit ‘larger gps under same roof’: i.e. families.
     Better population census as result of people registering their true addresses.
     More equitable distribution of ‘progress packages’ and better targeted social support framework through accurate census information, with consideration that not all private prop dwellers are ‘rich’.
     Improved govt image viz improved government transparency and maturity of govt administration.

    ii) Ease of implementation:
     Each SGporean/ PR/ legal FT etc is allocated an individual property tax allowance/ scale (adapted from income tax scales: http://www.mof.gov.sg/taxation/indiv_income_tax_rates.html).
    All amounts refer to per pax tax burden wrt annual value of property:
    [amounts < $2K]: no tax
    [amounts < $3k]: On the first 2K and next <$1K= [$0 + excess value x 3.5%]
    [amounts < $4k]: On the first 3K and next <$1K = [$35 + excess value x 5.5%]
    [amounts < $8k]: On the first 4K and next <$4K = [$90 + excess value x 8.5%]
    [amounts < $16k]: On the first 8K and next <$8K = [$430 + excess value x 14.0%]
    [amounts < $32k]: On the first 16K and next <$16K = [$1550 + excess value x 17.0%]
    [amounts > $32k]: On the first 32K and next whatever amt = [$4270 + excess value x 20.0%]
    and so forth… (see income tax rate 2007 for the idea: http://www.mof.gov.sg/taxation/indiv_income_tax_rates.html)
     A family of 10 living in a large property of annual value $80K need not be alarmed about property taxes as each person’s allocation will be accumulated: thus the said property of 10 legal inhabitants will yield: $4300 in tax [i.e.: 10x the $<8k category], however if a rich tycoon decides to stay alone in such a property (inefficient land use): then the tax chargeable would be under the >$32k category at $4270 + 48,000 x 20%= $13,870.
     (currently the prop tax is $80,000 x 4%= $3200- for this rather large property)
     Computerized national registry records / elections dept records can easily yield the no. of ‘legal’ inhabitants residing in such quarters. This calc is no more complicated then that for the progress pkg/ income taxes and far more equitable.
     A similar formula can be used for rental/ ‘non-owner occupied’ properties.

    15) UN World Summit for Social Development and beyond: achieving social development for all in a globalizing world (Geneva, 26-30 June 2000) SG professed: “Economic development is undoubtedly necessary to ensure social stability. The thrust of our social development policy is to deploy resources to pre-empt social problems and actively shape the development of our society instead of dealing with them downstream.”- http://www.un.org/socialsummit/speeches/286sin.htm

    16) SG gov has no excuse not to do a good job implementing my suggestion:
    i) They promise a first class living environment as reason to raise GST, http://www.singaporebudget.gov.sg/budget_2007/gst.html#Q1 that being the case then there is urgent need for equitable land use/ distribution in SG.
    ii) They have manpower to check ALL commercial weighing scales in SG: between 04 till current and announce its completion: http://www.channelnewsasia.com/stories/singaporelocalnews/view/257636/1/.html
    iii) SG is an info comm. Hub, no reason why it cannot set an example in govt administration for other countries to follow in the accurate assessment on property taxes: http://www.i2r.a-star.edu.sg

    17) References:
     Singapore is a sick country: … has the fifth highest incidence of kidney failure in the world with about 20.1% Singaporeans suffering from hypertension and 8.2% from diabetes. Cancer is the No. 1 killer in Singapore. Every year, over 8000 cases of cancer are recorded here. http://www.nkfs.org/pc_health_screening.php
     WHITE HORSE “Prior to year 2000, the term ‘white horse’ was used to identify sons of influential persons to ensure such enlistees were not given preferential treatment.” http://www.bigomagazine.com/fooled/whitehorse.html , http://www.newsintercom.org/index.php?itemid=274
     PROPERTY TAX ACT: (CHAPTER 254)- http://statutes.agc.gov.sg/non_version/cgi-bin/cgi_retrieve.pl?actno=REVED-254

    Hoping for a fairer budget and progress for SG. , will appreciate feedback if any info is incorrect. Tkx.
    The ‘Non- elite but caring face’

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