Low tax regime has given Hong Kong the edge over competitors

PUBLISHED : Tuesday, 05 July, 2016, 3:15pm
UPDATED : Tuesday, 05 July, 2016, 11:02pm

Our leaders in the Liberal Party have spoken against the idea of raising profits tax. And we have given good reasons for our point of view.

Unfortunately Albert Cheng King-hon has chosen to ignore all of them, but instead resorted to name-calling, which would not be helpful to the intelligent debate of a perfectly serious matter (“Liberal Party is no friend of the working class”, July 1).

Mr Cheng has curiously linked the Occupy Central and Mong Kok incidents to some economic causes instead of the generally recognised social and political ones. And while acknowledging our various trades are going through hard times, he advocated raising profits tax by 2 per cent as the panacea for our misfortune. Strange logic indeed.

What Mr Cheng has overlooked was the importance of the low tax regime which has made Hong Kong more attractive to investors than our competitors, an advantage we should strive to keep.

The Liberal Party is probably the political party that represents the most small and medium-sized enterprises. We can therefore say with certainty that most of them are against any increase in profits tax, even in the best of times. Faced with the downturn of the economy, they are now even more resistant to any tax increase.

Mr Cheng said: “A profits tax hike would provide the government with more resources to address livelihood issues such as health care, education and wealth inequality and tackle them at source.” But does the government need more resources for that?

For the last eight years, the government has accumulated a surplus of over HK$400 billion. On March 31 this year, the reserves stood at HK$860 billion. The Exchange Fund stands at

HK$3.086 trillion.

An annual rate of return of 3 per cent would bring home an income of HK$90 billion per year. Our government is not short of money. It is just not spending, or spending wisely enough, to improve the quality of life of the less fortunate.

Mr Cheng would be doing Hong Kong a good deed by joining us in pressing our government to do more, and to do better, instead of self-righteously but wrongly pointing his finger at our caring business sector, which would be quite prepared to contribute to improving the livelihood of the working class and the less fortunate should a structural deficit threaten to occur in our budget.

Selina Chow, honorary chairman, Liberal Party