Hong Kong: Canadian Economist Expresses Concerns Over Tax System

Mary Swire, Tax-news.com, Hong Kong

12 January 2001

Hong Kong recently played host to a top Canadian economist, who warned that the jurisdiction should look to curbing spending before revamping its tax system. According to the Hong Kong iMail online newspaper, Dr Michael Walker of the Vancouver-based Fraser Institute, Canada's leading economic think-tank, met with Hong Kong Financial Secretary Donald Tsang Yam-kuen and other officials and expressed his own particular concerns for the tax system in Hong Kong.

Dr Walker said that he was most concerned with the uneven distribution of the income tax burden in Hong Kong. Speaking at a Canadian Chamber of Commerce lunch, he compared Hong Kong with other countries, including Canada. He said: 'When countries even like Ireland and Canada are decreasing their tax rates, Hong Kong does not want to send the message that taxes should increase. Hong Kong's genius lies in that it is a low-tax burden jurisdiction. Economic progress depends on that reality'.

Dr Walker said that Hong Kong should address the problem of expenditure, which is constantly rising. Comparing Hong Kong's situation to that of Canada's richest province, Alberta, he pointed that both have been able to keep taxes low by having tangible assets - In Hong Kong it is property and in Alberta it is oil.

To bring expenditure and revenues closer together, Dr Walker stated that the best move for Hong Kong would be to introduce certain new taxes to increase revenues. He said that he was a strong supporter of the introduction of consumption taxes such as VAT or a goods and services tax (GST): 'A move towards consumption taxes would be the best option for Hong Kong,' said Dr Walker.

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