Monday, July 17, 2006

Universal Suffrage and the GST

There has been quite a lot of talk about two things in Hong Kong of late.

The first is the idea of Universal Suffrage, specifically in regard to the election of the Chief Executive (Mayor) of Hong Kong. The second is the continuing push by non-elected civil servant types to institute a Goods and Services (GST), Sales or V.A.T. tax scheme in Hong Kong.

I am in favor of having an elected C.E.O. in Hong Kong, however; I have real concerns as to whether it would help solve any political issues in Hong Kong. I am not like the pro-PRC parties that oppose universal suffrage because they do not believe that Hong Kong is ready for it. Hong Kong has a literate and reasonably well educated population. The argument that the population here couldn’t handle the complexities of voting for a mayor like billions of other people around the world is simply insulting.

I am concerned about the Universal Suffrage push because I feel that many of the people promoting it see it as a sort of a be-all-end-all magic bullet for the political problems in Hong Kong. It isn’t. Look at the Philippines, can anyone in their right mind say that the government there is not so corrupt that the average Fillipino wouldn’t be better off with a benevolent, “father knows best” non-corrupt, dictator like, say, Lee Quan Yu of Singapore who wasn't voted in? Think about it! Which country has a higher standard of living, better enforcement of laws, cleaner environment, and smaller percentage of its population in poverty and fewer social problems; Singapore or the Philippines? Singapore. Which leader Gloria Macapagal-Arroyo or Lee Quan Yu is elected by universal suffrage? Gloria Macapagal-Arroyo. In Singapore the only people who are allowed to run for office are the one that Lee Quan Yu approves. The citizens can only vote for government approved candidates. Thus, suffrage in Singapore is a sham snd it doesn’t matter that Mr. Lee was voted into office, there wasn’t really anyone else to vote for. There is no opposition to government on the ballot in Singapore. Yet, of the two, Singapore is the better place to live in many ways.

I think that politicians in Hong Kong need to look more at providing good government. Universal suffrage is probably part of that but it isn’t the only part and I don’t know if it could even be considered the most important part.

This fat cat thinks that the most important job for people who believe in a freer Hong Kong is to drive a stake through the heart of the unelected, over-paid, fat-arsed, self-righteous, arrogant, inflexible, conceited, pencil-pushing, running dogs left over from the British Imperial office bureaucratic civil service; which I call “Baboons” for short.

No better example the pernicious, malignant and misguided nature of these “public servants” can be seen than the continued attempts to institute a Byzantine, regressive, oppressive and difficult to collect and enforce GST, Sales Tax or VAT scheme in Hong Kong. Every government is going to have unelected civil servants but Hong Kong is one of the few places where they set tax policy. To be fair, most of these high ranking baboons that are causing problems work in the CEO’s office. Donald Tsang himself was one of these baboons.

The impetus for this is a report issued by the government in about 1998 that claimed that Hong Kong needed to “Broaden” its tax base. The original idea was to move away from the need to bubble up the property market to collect government revenues which caused a shortfall in taxes when Hong Kong had its recession in 1997-1999 and the property bubble that made the UK rich burst leaving the locals flat busted and awash in negative equity. Broadening the tax base isn’t a bad idea. But the way the baboons want to do it is to institute a scheme that is so complex that it is unworkable. Its real purpose appears not to “broaden the tax base” but to broaden the civil servant base. It provides jobs for redundant civil service personnel who could otherwise be forced to eat their “fat chicken meal” and then find another job.

Worse, it does not tax Li Kai Shing or big business or any or the huge polluters and pillagers who have made billions off the backs of the poor in Hong Kong for decades at all; but imposes’ an onerous tax upon the middle class. I realize that all taxes fall disproportionately upon the middle class. Even in Hong Kong there are not enough wealthy tycoons to pay the governments freight. However, this system doesn’t even try to tax those who can afford it. Any way they slice it the GST scheme falls mainly upon the less fortunate.

The reason the GST looks good to the baboons is that they make huge incomes, live in huge flats, drive big fancy automobiles, send their kids to expensive schools on HK Island and are out of touch with the cost of living here for the average person. They are just waiting to reach sixty so they retire to one of their houses in the US, Canada, Australa or Belize and in their arrogance think that it would be a painless, and easy to bear tax.

I repent. The baboons are not baboons; apes are smarter than that; these people are morons. Rich morons but morons never-the-less. Yes, Donald, that means you.

Rather than the complicated, Byzantine GST scheme being considered if the government really wants to broaden the tax base then try this.

How about a flat HKD$1000.00 tax on every LOADED 20 foot (6.5 meter) shipping container that arrives or leaves Hong Kong. That is only about USD $130.00 which considering that the value of goods in those containers can be millions is an insignificant tax on those goods. I doubt, if the tax would amount to much above 2% or 3% of the value of any of the cargos. It would be levied against the OWNER of the goods but collected by the container handling companies in exactly the same way that businesses would collect the GST. But there would be fewer people doing the collecting and vastly more money raised. There could and should be an exemption for household goods for people who are relocating to or from Hong Kong but that is it. This is a tax would be paid by large companies and the more they ship the more they would pay. Making it a flat rate rather than based upon the value of the cargo makes it easy to collect. It would, and this important, be paid by people who don't live in Hong Kong. If Wal-mart orders 15 containers full of shoes from China that were transhipped through Hong Kong and paid HKD $15000 in taxes on the containers then the customers in Wal-Mart pay the tax because Wal-Mart would pass the cost along into its prices. Thus, a consumer in New Jersey might pay USD $10.29 rather than USD $9.99 for a pair of cheap sneakers. Better them than us.

There are 22 million containers transshipped through Hong Kong every year. At HKD $1000.00 each the tax would be 22 billion Hong Kong dollars or 2.8 billion US. That looks like a pretty broad amount to me.

The objection here is “Hong Kong is a free port, our prosperity is built on it and we’ve always had it this way” Well, the same objection applies to the GST. We’ve never had one and HK has always been known as a low tax place. Adding a goods and services tax will have a much greater effect on tourism, not mention the knock on hardship caused to the poor and middle income people

My tax could be implemented and the size of the civil service could still be cut because it would not require the huge army of officials to ensure enforcement. Thus it would save money as well as make money.

I want to see Universal Suffrage here. But, I want to see it in conjunction with a better government. Part of that better government is to stop letting people who admire the punitive and regressive tax systems in Europe and North America do our tax planning.

Another part of bad government in Hong Kong is the bloated pay scale of the civil service that causes civil servants be more concerned with keeping their jobs and benefits intact than with doing what is truly in the best interest of Hong Kong. The extremely high salaries of the civil service in Hong Kong are actually a form of corruption that needs to be stamped out. But that is another rant for anther day.

It might not be perfect, but it is a better place to start. Reform the Civil service and then push for Universal Suffrage.

Until Next Time
Fai Mao
The Blogger who could fix the Hong Kong Tax System if He were King For a Day

No comments: