Today’s Issue of Steve Sjuggerud’s DailyWealth
Hong Kong Adapts to the
Brave New WorldOne of our favorite anecdotes about Hong Kong dates back to 2003, when the S.A.R. was mired in doom and gloom (property prices were down Ã¢â‚¬â€œ70% from their highs, people were hysterical about SARSÃ¢â‚¬Â¦). That year, taxi drivers went on a strike to ask forÃ¢â‚¬Â¦ lower cab fares! The logic was that, at a lower price, more people would ride taxis (the government refused on the premise that the cabs would then start competing with the buses, tramways & MTR). If nothing else, this story illustrates HK’s amazing power of adaptation and “can do” attitude.
An interesting discussion that seems to follow on logically from the Globalised Economy. I had wondered if HK was in fact just raising taxes, but it seems to be actually shifting its tax portfolio.
I actually prefer the idea of consumption based taxes rather than income based taxes. In our world, we should allow people to keep as much money as they legitimately earn from the work they do. In fact, most people seem to have forgotten that payroll taxes were in fact ‘slipped through’ due to slight of hand on the politician’s part (IMHO). We’ve so got used to the idea that we pay taxes through this means that anything else seems unfair.
Taxes on consumption do allow people to make choices that they don’t currently have: I can choose to buy or not to buy something, that gives me control over the taxes that I pay. Currently, I have to pay for an accountant to help me with the maze of taxes… Unfortunately, even the rich can’t spend that much on their lifestyle purchases. So likely the taxes are going to be more biased on those earning less money.
However, those with money will always be able to find ways to cut their tax bills. ALWAYS. Taxes by definition fall on those least able to pay them, because they have so few ways to avoid them legally.