Posted by: rbbadger | August 9, 2008

Taxation in Hong Kong

One of the things that has helped to make Hong Kong the fabulously successful place it is are the low taxes.  There are income taxes, but the highest tax bracket is about 15% and very few people fall into it.  Indeed, many people do not even pay an income tax at all.  Additionally, there is no sales tax.  South Korea does have a sales tax, but you don’t notice it, as it is included in the price of whatever it is that you buy.  This sort of taxation is especially prevalent in Europe.  In Hong Kong, there were plans to introduce a Goods and Services Tax of about 5%.  Well, the public backlash that resulted over that resulted in the government dropping the proposition entirely.

Milton Friedman, the Nobel Prize-winning economist, especially singles out Hong Kong for especial praise in his book Free To Choose.  Of course, Hong Kong is not helped by low taxes alone, though they do contribute to the success of the Special Administrative Region.  Another major cause of Hong Kong’s success are the Chinese people who are known not only for their thriftiness, but for being hard working, too. 

Interestingly enough, the authorities of the Central People’s Government in Beijing has not only allowed Hong Kong to keep whatever revenue it manages to collect, but also permitted them to continue to have their own Olympic Team.  I saw them march in while watching a replay of the Opening Ceremonies this morning.  Additionally, Hong Kong joined the WTO separately from Mainland China.

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