Hong Kong Financial Secretary Henry Tang said on Saturday that there are inadequacies in Hong Kong's tax system and the proposed goods and services tax (GST) could be a stable revenue source.

He said the government must find a stable revenue source because its income relies too heavily on Hong Kong's economic performance and is always affected by the global economic cycle, according to a government press release on Saturday.

Speaking on a radio talk show, Tang said the government's revenue fluctuated after the Asian financial crisis, showing that there are inadequacies in Hong Kong's tax system.

Noting the proposed goods and services tax could be a stable revenue source, he said it is the right time to discuss its introduction.

If the proposed GST was implemented, education services would not be exempted from it. However, the Government would offer more allowances and relief measures to ensure that parents' education spending would not increase, he said.

Hong Kong Secretary for Financial Services & the Treasury Frederick Ma said GST will enhance Hong Kong's competitiveness because it will create room for a reduction in profits tax.

In response to former Governor Chris Pattern's comments on the proposed GST, Ma said Pattern did not understand Hong Kong's recent economic situation because he had never experienced the trauma of the Asian financial crisis.

Source: Xinhua