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Preserving Revenue Base
140. The second major recommendation of the Working Group is that Government should preserve, stabilise and broaden the revenue base. I am all for it. Having regard to the competitiveness of Hong Kong and the impact on the community, there is little room for major tax hikes. In principle, I shall not rule out any means to increase tax revenue. However, I also understand that it will be controversial to propose any new taxes, which need thorough consideration and public discussion. At the present stage, Government's priorities are to overcome the constraints posed by the ageing population on our economic growth, keep moving our economy up the value-added chain, and increase and preserve our revenue. Meanwhile, we have to ensure that our expenditure growth keeps pace with economic and revenue growth. We should also strive to forge a consensus in the community on preparing for Hong Kong's fiscal challenge in the short, medium and long term.
141. To prevent revenue loss, the Inland Revenue Department (IRD) will draw on international experience, step up tax enforcement and make better use of IT to combat tax evasion and avoidance, thereby recovering tax payable. The IRD has recovered over $14 billion in taxes over the past three years. We should preserve our indirect taxes such as rates and business registration fees, because they are broad-based and stable revenue sources.
142. Fees and charges is an important source of government revenue. Last year, I asked government departments to review their fees and charges, beginning with items which did not directly affect people's livelihood. After a review of more than 1 300 fees and charges, more than 200 increases have been proposed. These will reduce the loss of public revenue by around $60 million per year. We shall review other fees and charges this year, including water charges, which have not been revised for 19 years, the fees for use of leisure facilities and services, and charges relating to environmental hygiene services.
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