Tax talk: Financial Secretary Henry Tang says there are inadequacies in Hong Kong's tax system and the proposed goods and services tax could be a stable revenue source.

Financial Secretary Henry Tang says 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.

Speaking on a radio talk show today, Mr 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.

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.