Responding to the largest rally to take place so far during the GST controversy, Secretary for Financial Services and the Treasury Frederick Ma Si-hang explained the SAR's revenue has hinged largely on several "unstable" sources of income: land premiums, profits tax, stamp duty and salaries tax.

Over the past eight years, annual income from land premiums fluctuated between HK$5 billion and HK$35 billion, or a 600 percent volatility rate, Ma said.

ADVERTISEMENT

Annual income from profits tax, the highest single source of revenue, swung between HK$38 billion and HK$71 billion. Salaries tax revenue ranged from HK$25 to HK$37 billion annually.

"Such volatility makes it difficult for us to plan medium- to long-term public services, as well as infrastructural facilities," Ma said.

He added Hong Kong's aging population will mean a decrease in the proportion of salaries taxpayers and an increase in health and social services expenditure.

But City University political analyst James Sung Lap-kung predicted that, instead of enlightening the public, these arguments would only serve to further alienate the people.

Sung, who is also a professor of public finance at the university's public administration department, said the government's marketing tactics had simply failed to cater to the lay person.

"What the government is saying is fact: our revenue is volatile. Some years we have a surplus, while others we have a deficit," Sung said.

"But the government cannot convey this rationale to the people using technical language that only tax experts or scholars will understand."

That mistake has been worsened by the government's "high" proposed taxation rate of 5 percent, coupled with the frequent mention of "saving up for a rainy day," he said.

"The future is unclear. The government has no clear direction, and people are anxious about marginalization and an aging society," Sung said.

"They're scared about the future, and under those circumstances the most rational thing to do is to keep your money in your pocket."

This failure to convey "goodwill," combined with "horrible marketing," has resulted in significant damage to the public's trust, he said.

"Nobody can save [Financial Secretary] Henry Tang or Frederick Ma. They've dug their own graves, and no matter what new arguments they come up with, the people will not listen," he said.

"The GST is dead. The government should give up, and learn its lesson for next time."