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FS' transcript

    Following is the transcript of remarks (English portion) by the Financial Secretary, Mr Henry Tang, to the media after attending RTHK's phone-in programme "Dialogue with the Secretaries" this morning (November 14):

Reporter: Mr Tang, two questions. How will you gauge the response to Link Reit IPO and the second one is about GST (Goods and Services Tax). Are you going to propose a timetable? And as soon as when will GST be introduced?

Financial Secretary: As far as Goods and Services Tax is concerned, my intention is to announce a timetable and a direction on where we are going regarding broadening of tax base in my upcoming 2006-07 Budget speech. Since in the last two years there has been substantial discussion about it, I feel it is time we should make clear the future direction. As far as Link REIT is concerned, this is the relaunch of Link REIT. The relaunch was announced yesterday and application will begin today. So, we feel that we have reviewed all aspects of a legal challenge and our goal is, firstly, to minimise the chances of any legal challenge, and secondly to place as much this people's asset in the hands of the people as possible. All-in-all, we feel that we have all the bases covered and we feel that it will be attractive to certain types of investors. But because the market has changed, so our expectations should be different from last year.

Reporter: As far as the Link REIT is concerned, people are saying that the market atmosphere right now is not that good, are you a little bit concerned...? And as far as the GST is concerned, you mentioned there have been ongoing consultations, so people would like to know when the government will make a decision on that.

Financial Secretary: On broadening the tax base, and specifically a Goods and Services Tax, because it is a new tax and it is a very controversial tax, I think it would be irresponsible of the Government, for us, to decide to go ahead with a GST without a full and thorough consultation. I believe there should be an opportunity for the whole community to express their views and for the Government to listen to the views of the people before we decide on the future direction or what to do with GST or specifically on broadening the tax base. So all-in-all I think a full and thorough consultation will be necessary. As far as Link REIT is concerned, REIT íV Real Estate Investment Trust íV is a kind of investment vehicle that is suitable for a certain type of investor, so we are confident that Link REIT will be attractive enough for it to be sold successfully. We are not too concerned about whether it will be as enthusiastic as last time because the market conditions have changed, so investors should know that when market conditions changed, people's investment decisions do change.

Reporter: Mr Tang, are you saying that GST will not be introduced until some time after 2009?

Financial Secretary: Well like I said earlier, a Goods and Services Tax is a very complex tax and it will require a full and thorough consultation. Based on overseas experience, it will take a minimum of three years from the decision to introduce a GST to the actual implementation of it. So that is why it is years away, even after having made a decision, and we have not made this decision.

Reporter: So are you suggesting it could be after 2009?

Financial Secretary: I think it will not be earlier than 2009.

Reporter: Can you comment on the political reform package? There has been quite a controversy over this matter. Do you think we need a timetable for universal suffrage before we can resolve the stand-off?

Financial Secretary: Universal suffrage is promised to us in the Basic law. It is enshrined in the Basic Law and it is a goal that all of us will strive towards. So whatever we are doing now, we should put that into context that it will be an evolutionary process and not a revolutionary process. Evolutionary process means an incremental gain as we go towards that goal of universal suffrage. I believe this is an excellent progress. The proposal so far is actually more progressive than the 1995 electoral arrangements. I believe people should look at it objectively and constructively, and not lose this valuable opportunity for us to make progress towards full democracy.

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

Ends/Monday, November 14, 2005
Issued at HKT 15:18


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