THE introduction of a goods and services tax (GST) may drive away almost 50 per cent of the jewellery merchants in Hong Kong, endangering the jewellery trading hub, according to the results of a survey released on September 26 conducted by an independent agency and sponsored by the Coalition Against Sales Tax, was held at the Hong Kong Jewellery & Watch Fair 2006, from September 18 to September 23. Some 601 attendees were interviewed. The survey showed 76 per cent of buyers and 82 per cent of exhibitors were opposed to the GST, while 65 per cent of overseas buyers and businesses agreed a GST would hurt consumer spending.
According to Lawrence Ma Young-yi, director of the Coalition Against Sales Tax and president of the Diamond Federation of Hong Kong it would have serious consequential damage on both the international and local jewellery markets in Hong Kong. Not only would it possibly cause inflation, it would also cause logistical issues for manufacturers in the city. Although foreign merchants can buy from other countries, local retailers will have no choice but to pay the tax. According to Hong Kong Jewelry and Jade Manufacturers� Association chairman Li King-hi, the tax would impose �tremendous pressure� on manufacturers, since all raw materials and merchandise would have to be tracked down and purchases recorded.
Hong Kong is the world�s third-largest exporter of jewellery, and the tax could determine the direction of the trade, which is currently worth approximately HK$20 billion and which employs almost 30,000 people in retail, wholesale and manufacturing.
According to the survey, almost 50 per cent of merchants stated a GST would force them to go to other major cities to exhibit their merchandise, and thus, affect tourism and business. There are cities like Singapore that are just waiting to take over the market. Jewellery merchants and purchasers spend up to $6,000 (HK$46,800) each per visit.