How Hong Kong's printing industry digests sales tax
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The government recently launched a nine-month public consultation on the introduction of a Goods and Services Tax (referred to as sales tax), and the new tax has caused great controversy in society. In order to give the industry a more comprehensive understanding of this issue, on August 25, this Council will hold a press conference entitled "How Hong Kong Printing Industry Digests Sales Tax" at the City of the Millennium, and invites Legislative Council Members. Li Huaming attended the analysis of the tax system content and opinions of the sales tax for the industry. The guests who participated in the Longmen Array on the same day spoke enthusiastically, and the atmosphere of the discussion was very enthusiastic.
According to the contents of the comprehensive consultation document, the important rationale for the government to levy a sales tax is: 1) Hong Kong's tax rate is low, and many incomes are not derived from taxes; 2) Hong Kong's tax base is narrow, taxpayers account for a small portion of the working population, and taxes It is also diminishing as the population ages, further weakening Hong Kong's advantages; 3) High profits tax and salaries tax rates make it difficult for Hong Kong to retain talents, and it is difficult to attract foreign investors to register companies in Hong Kong; 4) Fair taxation can bring stable income to the government.
Those who are in favour of a sales tax point out that the current economic situation in Hong Kong is the most appropriate time to fully implement the sales tax. If it is not implemented as soon as possible, the Government's future revenue will definitely decrease. In addition, the problem of an aging population in Hong Kong has intensified, and the number of people who have been paid out of the salaries tax network has risen. Once the economy of the Hong Kong economy declines and the government's income decreases, it will not be able to cope with the difficulties.
Li Huaming asked whether the financial situation of the Hong Kong government is really so bad. The Government has stated that Hong Kong's annual deficit is 40 to 50 billion. However, the deficit is caused by various temporary external factors such as the financial turmoil, SARS and 911. It is not a problem in Hong Kong's economic structure itself. Hong Kong's fiscal reserves amount to more than 300 billion yuan. It has neither debts nor liabilities. The financial situation is the most stable in the world. It is not as good as the United States to print banknotes and issue bonds to meet debts. Moreover, the government still has many homes when necessary. Projects such as the AA and parking lots can be sold. It can be seen that the Hong Kong Government is not really poor. Moreover, looking at other countries that implement sales tax, such as Singapore, once the system is implemented, the tax rate will only increase and there will be no possibility of abolition. Therefore, it is worthwhile to consider carefully before making the relevant decision.
In the printing industry, will the implementation of the tax system adversely affect the operators?
Under the new tax system, suppliers such as paper, ink, film, etc. are required to pay 5% of the commodity tax. Once the relevant costs are passed on to the printers who purchase the raw materials, the printers responsible for providing the service must bear 5% of each raw material. In addition to the additional cost, if the finished product is delivered locally, an additional 5% sales tax will be required. If the relevant cost is also passed on to the customer, the total cost of the finished product will be greatly increased, and the increase will often be more than 5 %. That is, in the past, printers offered customers $1, and the amount would have to be raised to $1.15. For Hong Kong printers competing in the local market, the system is fair, but when it competes with printers in China, Macau, Taiwan and Singapore, the cost advantage of Hong Kong manufacturers is weakened in real time. Or if the manufacturer purchases raw materials directly from the raw materials supplier without LC, it can save 5% of the tax expenditure, but only large enterprises have sufficient capital and storage space to purchase a large amount of raw materials, but SMEs Without this advantage, the implementation of the system will undoubtedly further stifle the living space of small and medium-sized enterprises. Although the new system states that export products can be exempted from the relevant taxes, the increase in raw materials due to taxes will indirectly weaken the export competitiveness of manufacturers and combat the livelihood of manufacturing employees. As Mr LEE mentioned, manufacturers do not necessarily pass on the increased costs to buyers. In order to compete, it will make Hong Kong's industry and commerce more difficult and more difficult to operate.
As mentioned in the consultation paper, the implementation of the new tax system can indeed exhaust the tax, but the enterprises with an annual turnover of more than 5 million must register with the government, while those below 5 million do not have to register, only the latter. The number of people has soared, and it is impossible to stimulate the economy at all, which will reverse the economy.
With the continuous increase in domestic manpower and operating costs, the cumbersome and complicated procedures for customs declaration, and the many restrictions on import and export goods, the unique advantages of setting up factories in the north have gradually subsided. At present, some Hong Kong printing companies operating in China also have reflux. Hong Kong's intention, but the implementation of the sales tax has further weakened the advantages of staying in Hong Kong, and the hope of a return to life in the manufacturing industry has failed.
The Government considers that the sales tax is a fair tax system, but it is very complicated. For example, local sales must be taxed. Exports can be deducted from taxes. This is a trouble for the industrial and commercial sectors. There are also grey areas. For example, foreign companies order goods from Hong Kong manufacturers, but they Payment by the Hong Kong branch, should it be taxed or not taxed?
Why not implement a more fair "head tax"? It is not necessary to use a huge taxation team. It can be entrusted by the "Octopus". The tax system is simpler. The public knows how much tax is paid to the Government and it is easy to control expenditure. The business and service industries do not have to worry about increasing costs. If there is a surplus in government revenue, the "head tax" should be exempted in the next year. If there is a loss, it will be taxed by head. Who says it is unfair? ! If this approach is adopted, the Government will not have to retain a large surplus, reduce the management staff of the HKMA and substantially reduce expenditure.
Since the end of 1997, the Hong Kong economy has been affected by external factors and has fallen into recession. The salaries of civil servants and government departments have never been deducted. The implementation of the new tax system has continued to expand the civil service and there has been a delay in expanding government spending. Recently, the Government has proposed It seems that there is a violation of the principle of small government by increasing the number of deputy directors of the Policy Bureau. It seems that there is a violation of the principle of small government. If the Government wants to break even, has a surplus in the financial sector and enhance the competitiveness of Hong Kong, should we first narrow down the huge and bloated civil service structure? Help local industry and commerce? If the government really supports the manufacturing industry, it can open a processing zone in Shenzhen Hetao, so that manufacturers do not have to transit to domestic processing, eliminating the risk of transportation costs and being detained due to customs clearance. Can we start with logistics, information, education, tourism, etc., focusing on helping to promote Hong Kong's employment rate and promote Hong Kong's prosperous manufacturing industry?