Think a 5pc GST is high? Consider prosperous Sweden

To a Swede, the debate and alarm in Hong Kong over the proposed 5 per cent goods and services tax is almost a joke. In Sweden, we pay a 25 per cent GST - necessary if you have a welfare state with a lot of expenses. On top of this, we have the highest income tax in the world. Despite this, Sweden is managing better than most countries in the European Union. This shows that a GST does not present a danger to a modern nation's economy, and does not threaten investments or consumption.

It is true that a GST will hit those with lower incomes harder, which is why Sweden has a social safety net. Hong Kong could have one, too.

Both the GST and income tax in Sweden have been designed by a government dominated by the Social Democrats, which has its ideological home towards the left. The Social Democrats have governed Sweden most of the time since 1920. The liberal parties, which stand a good chance of winning the next election - next month - believe taxes should be cut to stimulate the economy.

To this picture it must be added that the success of the Swedish economy is closely tied to two factors - whatever government we have. Brands are important to an economy, and Sweden has many - among them, Volvo, Alfa Laval, Ikea, Saab, Skanska and LM-Ericsson. Hong Kong so far lacks brands.

Also important is innovation. Sweden is among the world's top 10 in the league of innovative nations. If Hong Kong invested in an education system that inspired students to independent, creative and innovative thinking, then it could surely join this league - and thrive even with a GST of 5 per cent.

TOMAS ALMBERG, Central

Pure propaganda