Dig deep into your pockets please. We have an urgent Christmas appeal to make. The Hong Kong Society of Accountants needs a calculator, its first apparently, and some arithmetic lessons to go along with it.
The problem: Our tax base is not wide enough and the Government is operating in deficit. The society's solution: Cut taxes. So please help with a few coins.
Someone in a home for lost number crunchers needs to make the discovery that when you start with minus one and add another minus one to it you get minus two, not plus.
The society is not the first to make this mistake of course. You may remember something called Reaganomics 20 years ago, a leap of financial understanding by the United States' greatest ever intellect, one that landed the country in chronic and huge fiscal deficits from which it has only now emerged.
It was loosely based on something called the Laffer curve after a Professor Arthur Laffer who rose to fame with it. The idea was simple. There are two ways of guaranteeing that a government gets no revenue. The first is to charge zero per cent tax and the second is to charge 100 per cent tax.
Maximum revenues come from finding the happy medium between these two, said Mr Laffer and, not surprisingly, the corporate leaders who supported him concluded that the Laffer Curve showed taxes were too high. If only we dropped them we would stimulate the economy and government would then get more money, not less, they argued. The predictable results ensued.
It appears to be something along this line that our accountants are now also arguing. One of the problems they see is that our manufacturing industry has moved across the border. Their remedy is to cut profits tax to 8 per cent from 16 per cent for manufacturers setting up in Hong Kong and thus stimulate development.
