Carbon tax the way to blue skies and financial stability

PUBLISHED : Wednesday, 27 December, 2006, 12:00am
UPDATED : Wednesday, 27 December, 2006, 12:00am

The purpose of taxes in Hong Kong is to collect revenue for public spending on the various needs of society. The purpose of taxes in other developed countries sometimes goes beyond mere public revenue to act as a financial tool to drive certain changes. For instance, a tax on plastic bags in certain European nations aims to cut the excessive use of these bags, to reduce their environmental impact and to change public behaviour.

Our government has been charging licence fees for vehicles based on the volume of the engine's cylinders. In the face of international obligations, climate change and a public outcry for cleaner air, it should consider charging a tax based on the amount of carbon dioxide a vehicle will generate. Adding a carbon tax to the annual renewal of vehicle licences would encourage the public to buy low-emission and fuel-efficient cars.

If such a tax is charged in a place where the market is large enough, it could even drive industries to speed up the development of more efficient and less polluting vehicles, as well as cleaner fuels.

A carbon tax also upholds the spirit of the polluter-pays principle, as it would target the affluent people most likely to buy gas-guzzlers, and would therefore not affect low-income groups. Revenues from the tax could be used to subsidise medical costs for the treatment of patients with respiratory illnesses caused by air pollution, as well as to support local academics in conducting research and development for cleaner fuels and engines.

Furthermore, the overseas automobile industry not only provides customers with information on a vehicle's fuel consumption and power output, but also on its carbon dioxide emission levels. I believe our government should learn from this good practice and require that such information be made available to the public.

The idea of a carbon tax is in line with the spirit of the Kyoto Protocol, which requires nations worldwide to reduce their greenhouse-gas emissions to combat the crisis of global warming and its devastating impact on human life and the world's economy.

A carbon tax may not generate as much revenue as the government's recently proposed, and suddenly dropped, goods and services tax. However, it would be in line with its long-term taxation and environmental policies, by achieving financial stability and a clean blue sky.

EDWIN LAU, acting director,

Friends of the Earth

Don't mind Helen Clark

So New Zealand's prime minister, Helen Clark, has been in Hong Kong attempting to breathe new life into the goods and services tax corpse ('New Zealand premier sings the praises of a GST', December 16).

She praises a GST as a government cash cow yet admits that the idea would probably have been defeated in a referendum and that it created huge tax windfalls at the expense of business competitiveness. Business itself became the unpaid tax collector for the government.

Worse, the regulatory and compliance costs associated with six additional GST tax returns a year are horrendous, as are the penalties if you get it wrong. Mrs Clark has no first-hand experience of being on the receiving end of government compliance costs.

High-tax economies generally have low economic growth. A recent report by the Organisation for Economic Co-operation and Development concluded that New Zealanders were second only to the Japanese for the number of hours they work each week, yet are next to bottom for wages paid.

It's not hard to see why. Company tax, at 33 per cent, handicaps the competitiveness of business, and personal tax (including indirect taxes) is close to 50 per cent. Savings are almost zero.

Optimum economic growth occurs when tax as a percentage of gross domestic product is between 15 and 25 per cent. In Hong Kong, it is 20 per cent; in New Zealand, it is an inefficient 43 per cent.

Hong Kong has a far less generous welfare system, so any GST would have a serious impact on the less well-off. Hong Kong needs to stay well clear of the dreaded GST. This city's continuing success story will, in large measure, depend on its ability to retain small government and low taxes.


Middle-aged values

I've been watching the debate on the Star Ferry pier with interest. Like myself, it is well into its 40s - a little past its prime and not winning any beauty contests. However, there's something to be said for being middle-aged. For one thing, we're a little wiser, more practical and functional.

With plans for demolition of the pier, the whole practical and functional transport system and infrastructure built around it has gone. It certainly hasn't been replicated at the new pier. For instance, the taxi ranks are disorganised, with no obvious way of queuing. And there are not nearly enough taxis waiting there. It's unclear from where the buses leave, and there is no easy way of getting to them, as pedestrians are not catered for.

Last Saturday, after going to see a matinee showing of The Nutcracker at the Hong Kong Cultural Centre in Tsim Sha Tsui, it took us nearly an hour to get from the new ferry pier to a taxi. We finally had to walk to the Airport Express station to find one.

Furthermore, City Hall and the public library are completely cut off from public transport now that the buses have been moved and the taxis no longer service the area. After a concert at City Hall the other night, we had to walk into town to get a taxi.

I'm not against modernisation or progress, and I don't mind walking reasonable distances, but why replace something that works with an inferior, impractical alternative?

My five-year-old hit the nail on the head when she asked: 'But mummy, why do they want to build more shops? Hong Kong has enough already.'

She's right. I checked. Hong Kong has more than 55,000 retail outlets, 1,934km of roads, and more than 600 hotels. It has only one Star Ferry pier and only one Queen's Pier.

What are we doing?


Surely worth a lunch

Not long ago, you published a letter in which the author recounted that the chairman of HSBC had invited him to lunch, apparently to compensate him for the trouble he had experienced in getting an old savings passbook updated ('My little red book', November 1).

On November 30, HSBC sent me a letter saying that I had not used my sterling account for almost two years and that, if it remained inactive, the bank would levy a charge. I visited the bank and said that I had deposited a cheque in the account in July. This, I was told, did not count. Only a debit would make it active. The fact that the bank had levied a collection charge for the deposited cheque was also irrelevant.

I withdrew #1 (about HK$15) and immediately deposited it back into the account. No money changed hands. Now my account is active.

I am awaiting an invitation to lunch with the chairman to compensate me for the unnecessary trouble I suffered. I may be able to offer him some tips on customer service.


Cabin failures

I recently flew out to Hong Kong on a Cathay Pacific Airways flight from London. As a serial insomniac, I rely on just two things to survive the 12-hour flight: a reading light and the route map to tell me how far there is to go. Neither of these facilities were working on the aircraft. Nor was the cabin-crew call light, and several of the toilets were out of commission.

The cabin crew were as sympathetic and helpful as ever. They are obviously used to dealing with the failure of passenger facilities - failings which surely would not be tolerated in business or first class. My company paid nearly HK$10,000 for the ticket.

I only hope that maintenance on the more essential flight systems is of a higher standard.


Unfair to estate agents

Under recently introduced measures, estate agents are required to provide all relevant information about a property on the market. What I don't understand is why they have to provide documentation to prove a property is what the landlord or developer says it is, when neither of these parties is legally required to provide true and complete information to the agents.

It is absurd that property agents face having their licences revoked or even going to jail for failing to dig for some supporting document required by the law, but nothing will be done to landlords or developers, even if they deliberately withhold information.

A friend of mine even pointed out to me that, by law, property agents may not be insane or have financial problems. Is there legislation in Hong Kong requiring the same of doctors and lawyers? It would be pretty interesting to have an insane lawyer defending a property agent in court.