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No Departure Tax For Hong Kong

Wednesday, March 10, 2010

Hong Kong's Secretary for Financial Services and the Treasury Professor KC Chan says it is not appropriate to introduce a 'Boundary Facilities Improvement Tax' now, adding that the government needs to consider carefully whether it is appropriate to impose additional departure tax on passengers leaving for Macau.

Responding to lawmakers' questionson March 10, he said the government introduced the Boundary Facilities Improvement Tax Bill into the Legislative Council (LegCo)† in 2003.†

"At that time, there were quite extensive views in both the LegCo and the community that the proposal would add to the burden of frequent commuters between the Mainland and Hong Kong. They considered that the proposal would affect adversely the growing integration between Hong Kong and the Mainland as well as the economic recovery at the time. Hence, they opposed the Government's proposal," Chan explained.

"In view of that, the government subsequently decided not to take forward the relevant legislative work. Given the same considerations, we do not think it appropriate to put forward the proposal again now," he added.

On the suggestion of imposing an additional departure tax on passengers leaving for Macau, he said from a revenue-generating perspective, it is quite unlikely that this type of tax could bring about substantial revenue if it is set at a level the general public could afford.†

The embarkation fee payable by cross-boundary ferry operators to the Marine Department is not a type of tax but a fee to recover the costs the government incurs†in providing†terminal facilities and related services, Chan said. The estimated revenue from embarkation fee for 2009-10 is around HKD125m (USD16.1m).†

"We will continue to study options on broadening the tax base," he added.