The Taxation Institute of Hong Kong (TIHK) on Friday urged the government to consider widening the city’s tax base by introduce new taxes, such as value added tax (VAT) or goods and services tax (GST).

Speaking at a press conference ahead of the release of the government’s upcoming Budget, the institute's chairwoman, Anita Tsang, said these consumption taxes are feasible in Hong Kong.

"Many countries around the world have already implemented such [consumption] taxes. So there are lots of experiences that Hong Kong can learn from," Tsang said.

"In addition to GST and VAT, there are also lots of other types of indirect taxes that we can further explore, such as those related to carbon emissions, carbon pricing, or related to energy… Also if you look around the world in these few years, there are countries introducing lots of funny indirect taxes, such as sugar tax, to reduce sugar consumption.”

The institute's president, Winnie Shek, stressed that consumption taxes do not necessarily have a negative impact on the retail sector.

"In South Korea and Japan, they do have not-low GST or VAT that are at approximately 10 percent. However, we don't really see that tourists will be negatively affected by the implementation of these taxes, they still consume," she said.

"So it largely depends on the acceptance by the general population as well as education."

Shek also noted that the current tax regime needs to change with the times.

"Let's say, for example, digital operations, crypto currency, artificial intelligence, they did not exist [20 years ago], and the Hong Kong tax regime probably is not comprehensive enough to cater to these new types of models and business operations," she said.

Separately, the institute believes there's room for the government to raise the basic and married person's tax allowances by 10 percent to HK$145,000 and HK$290,000 respectively, to cater to rising inflation.

It also called on authorities to expand the stamp duty waivers for first-time home purchases valued at or less than HK$6.5 million, up from the current HK$4 million.



Edited by Priscilla Ng