Andrew Work and Wallace S.T. Chan (SCMP, 18th December 2006)

Members, associate scholars, staff and supporters of The Lion Rock Institute  were thrilled, we are sure, to see the headlines heralding the demise of the proposed goods and services tax earlier this month. Many groups in Hong Kong came out swinging against the tax, including the Coalition Against the Sales Tax, democratic parties, unions and free-market advocates.

The Lion Rock Institute was a leading critic, providing a clear, often original message on its impact. Consultations with politicians, business groups and others helped them formulate and articulate their positions. Some are still going on under the continuing consultation process (to ensure this thing is really dead, not just sleeping). The announcement made on December 5 was a tribute to those who strive  to keep taxes low and simple and restrain free-spending government. Together, we all changed the course of policy.

 The government did make one good point in the debate: Hong Kong has challenges that need to be faced. We believe the way forward lies in reforming our least market-sensitive institutions – including health care, housing and education. Doing so will create wealth and allow more people more personal choice in how they live their lives. That is the essence of freedom.

Any future taxation reform should not deviate itself from two major principles: low and simple. The low-taxation principle is not simply a matter of good economics – it’s the law. Under Article 108 of the  Basic Law,  our government is expected to adopt “the low tax policy previously pursued in Hong Kong as reference.