Hong Kong should tone down ‘laissez-faire’ business attitude, says Canadian Chamber president
Canadian Chamber of Commerce in Hong Kong president praises Carrie Lam’s tax initiatives for small business but says more needs to be done
The government’s new tax initiatives were a good start towards fostering small and medium companies but more must be done to overcome Hong Kong’s overly “laissez-faire” attitude towards business, the Canadian Chamber of Commerce in Hong Kong president said on Monday.
The comment came as Chief Executive Carrie Lam Cheng Yuet-ngor attended the chamber’s lunch to promote her policies and engage with business owners.
Lam announced this month that companies will soon pay tax of 8.25 per cent on the first HK$2 million (US$256,000) of profits, half from the existing flat rate of 16.5 per cent.
Companies that invest in research and development (R&D) could get a 300 per cent tax deduction for the first HK$2 million.
Lam outlined a “new fiscal philosophy” in her manifesto, saying the government had to shift from its traditional role as a regulator and service provider to facilitator and promoter.
She proposed a new direction for taxation to enhance competitiveness, and a ramp-up in spending, even going into deficit if it was in the public interest.
Derrick Lee Wai-kay, president of the Canadian Chamber of Commerce, told the Post that he welcomed the tax initiatives.
“The philosophy of Hong Kong government has long been laissez-faire,” Lee said. “But when it is overly laissez-faire with little interference [in the market], the small and medium enterprises find themselves hard to compete with the large companies. ”
Lee said the two-tier tax system that halved taxes on initial profit was a good start. While the savings for small businesses was not a huge amount, it could help businesses reinvest in themselves or recruit more employees.
He also said the tax deductions for businesses in R&D was useful to import talent, saying that was attractive to young entrepreneurs in Canada.
“Up to 90 per cent of the Hong Kong market are SMEs (small and medium enterprises). It is right for the government to put up more resources to support this segment,” Lee said.
In addition to the tax initiatives, Lee called for the government to put more efforts in promoting “Hong Kong brand” in the region and highlighting their strengths.
He also said there should be less red tape that SMEs must go through for licenses, suggesting a one-stop service for all start-ups.
Speaking at the business lunch, Lam described her tax measures as “bold and innovative”. She said a bill was already ready to go to the Legislative Council to first implement the two-tiered profits tax measure, and the government aimed for both proposals, including the R&D tax cut, to take effect from next year.
She also said Hong Kong could become the next Silicon Valley if it can tap into Beijing’s Greater Bay Area plan and develop as an innovation and technology hub in the region.
“I want Hong Kong – this city we call home – to be not only competitive, but also compassionate.” Lam said.