One of the main objectives behind introducing the GST was to maintain Hong Kong's international competitiveness by lowering direct taxes to lure talents and investments from other regions, a government source said yesterday.

The greatest challenge at the moment, he pointed out, was how to initiate rational discussions in society as the legislators seemed prepared to stop the consultation exercise at this stage.

But since the government's job at this stage was public consultation and not legislation, it would not engage in any political horse-trading in order to secure legislators' support, the source, who declined to be named, stressed.

As to whether the government would promise not to use the profits from GST to cover any possible budget deficit in future, he said emphatically that "as far as taxation is concerned, the government never promises anything".

While responding to accusations that the public will have a difficult time assessing the impact of the proposed tax on their livelihood due to the lack of concrete figures from the government as to how much direct taxes would be correspondingly reduced, the source said that the government was expected to post a few scenarios on the web next week showing different possible combinations of percentages of reduction in salaries and profits taxes and their implications for the average families.

(HK Edition 07/19/2006 page2)