Hong Kong plans to introduce GST

[gato]

Don't forget the Overseas Education Allowance under which over 12,000 HK civil servants can send their children to boarding school in the UK at taxpayer expense.

Ooo, that's a biggie.... This must be one of the legacies of the British.

[skylee]

at taxpayer expense

I think that is called employee benefit ... I suppose you wouldn't call it "at stockholders' expense" in the private sector ... whatever ...

[skylee]

... quite suddenly.

Tax retreat draws praise from all but accountants (haha this is exactly what Ian said in his post #19 - "GST will be only liked by accountants and government bureaucrats.")

[Ian_Lee]

In the mean time, Singapore is going to raise its GST from 5% to 7%, Canada is going to lower its Federal GST from 7% to 6%, Germany is raising it from 16% to 19% and Hawaii is going to raise its GST by 0.5% in the upcoming new year.

But the overall trend is that once the GST is installed, it becomes the cash cow for the politicians.

Anyway, it is really nuts for a government like that of HK, which records astronomical budget surplus, talks of raising new taxes. (It is also nuts for the Bush administration, which records astronomical budget deficit, talks of lowering taxes.)

Actually I am not against flat tax. But it got to be fair and simple. The most equitable flat tax should be "Head Tax" which Magaret Thatcher considered introducing in the early '80s.

The advantage of levying Head Tax is that any HK resident, no matter you live in HK or not for that tax year, you got to pay. So all those HK-born babies by Mainland parents, who are carried back to Mainland after their birth, need to pay the accrued Head Tax before they can enroll in local schools.

And such tax is quite easy to collect. Just install swipe machine in 7-11 and you can renew your HKID anytime of the year by deducting $300 from your octopus card!

[tiandixia]

"Actually I am not against flat tax. But it got to be fair and simple. The most equitable flat tax should be "Head Tax" which Magaret Thatcher considered introducing in the early '80s."

And if a person's salary is too small or s/he is otherwise too poor to pay the head tax? Will s/he be sent to a correctional facility or will s/he lose the right to carry a head? Or maybe a tattoo in the forehead:

"Property of the HK Department of Inland Revenue. Damaging or destroying this head will incrue a serious fine or a jail term, the length of which will be decided by the local small items court and limited to a maximum of two years."

No use speculating I don't have a vote in HK!

[Ian_Lee]

tiandixia:

As in any new tax proposal (same with the aborted GST scheme), there will be either waiver or exemption for the lower class. Same with the Head Tax.

The Head Tax should be applicable to Hong Kong because currently there is a huge segment of the local population who work/reside outside of the territory and do not pay any local income tax at all.

But when the time comes that they need service, i.e. those who work in Shenzhen and get sick, then they cross the border back to Hong Kong and seek (almost) free treatment in the public hospital.

That is basically unfair to those who work locally in HK and have paid income tax.

Of course, HK government can propose a global income tax scheme. But it is too complicated and basically works against the simple and fair principle of HK tax system.

But Head Tax is fair and simple.

If Milton Friedman were still alive, he would support Head Tax to be implemented in HK too!

[tiandixia]

an_Lee

The same goes for Scandinavia where most athletes and musicians with some success relocate to tax-free havens like Monaco, Switzerland etc. Probably we don't have the same proportion of the population working abroad yet so discussions of Head Tax have not surfaced yet.

Situation in Nordic countries has an extra twist when even ordinary people can do super easy tax avoiding by working in the neighboring country parts of every year and thus getting flat, almost zero level tax. This practice has to do with that almost every country feels that they don't have enough experts or other desired (cheap) labor that must be lured into the country by letting them off the ordinary people's heavy tax burden. So A goes to B's country for work, say six months every year, and B goes to A's country to fill the gap A left in his own country and other people pay the bill.

Global tax, as the Americans do, at least inside the EU would be an answer for that. If you don't wish to pay the homeland taxes you just change your citizenship to a more desirable country and you are done with it. But since it hasn't been introduced yet, I wonder if it ever will.

Head tax, I guess, will always be seen as just another tax break for the wealthy and would have a hard time winning any popular vote unless the majority of the people really feel as part of the wealthy ;-)