Hong Kong drops sales tax

What is proposed?
5% sales tax that would raise HKD3.8bio per annum.

Why the drop?
Politically inconvenience. Sadly it reflects very poor planning.

What is the current budget situation in HK?
1. About 1/3 of income earners pay tax. Very narrow tax base.
2. They have been living admist budget deficits.

I wonder how have they been funding their budgets year in year out.
More land sales? How much more land you can sell?
More Disneylands? Oops.. that is certainly a costly exercise.

Any alternatives?

  • More “sin” taxes ie. on cigarettes and liquors. Maybe it is a good outcome afterall.
  • Capital gains tax – very painful for Hong Kongers as “buying and selling” is a favourite past time activity there.
  • More taxes on car – another possible good outcome of no sales tax – it would help with the smog.

I hope Hong Kongers will take action to avoid borrowing from the future generations and spend today.

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