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Following is the transcript (English portion) of a media session by the Financial Secretary, Mr Henry Tang, on Standard & Poor's decision to upgrade Hong Kong's foreign currency sovereign credit ratings at the lobby of the Central Government Offices (West Wing) this afternoon (July 20):

Financial Secretary: Standard & Poor this morning announced its upgrade of our credit ratings to AA-. We welcome this upgrade. They have reaffirmed our improving fiscal situation as well as improvement in our economy. But I believe the important point is the affirmation of the collective effort in our will and our ability to control public expenditure. The integration of our economy with the Mainland's is also an advantage. We will continue to work on improving the flow of funds, the flow of people as well as the flow of goods between the two places. I believe this will offer tremendous opportunities for us.

Question: They said you would widen the tax base. How will you widen it?

Financial Secretary: Every single time when they speak about us, they mention our narrow tax base. We agree with that view. Indeed, the review committee has, time and again, commented that our tax base is too narrow. So we will explore ways to broaden the tax base, but I assure everybody that we will not go ahead with any measure without fully consulting the community.

Question: What are some of the possible means?

Financial Secretary: There is a whole basket of means. Of course there are certain existing mechanisms that will allow us to expand the tax base. But there are other new measures, such as a goods and services tax. I have mentioned a GST in many contexts and I do believe this is one of the better ways to broaden the tax base which is fair and non-regressive.  

Question:  Will the Government be likely to privatise more of its assets?

Financial Secretary: We have plans for privatisation. In my previous Budget Speech, we had made those plans public. We have no plans to change them yet.

(Please also refer to the Chinese portion of the transcript.)

Ends/Wednesday, July 20, 2005

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