Hong Kong’s richest man yesterday called for higher corporate taxes to help tackle wealth inequality and urged the Hong Kong government to think of ways to counter rising discontent among younger residents by providing them with more opportunities.
“Tax companies an extra 1 or 2 percent, then a lot of the poor would benefit,” CK Hutchison Holding Ltd (長和集團) chairman Li Ka-shing (李嘉誠) told Bloomberg Television.
“The most important thing the government needs to think about are the options made available to young people,” he said.
Photo: AP
Li, who says the territory is going through its toughest times in two decades, is weighing in on the global income-inequality debate that has prompted the likes of Warren Buffett and Bill Gates to call for higher taxes for rich people.
While low taxation has helped put Hong Kong atop the IMD business school’s list of most competitive places to do business in the world, one in seven residents there live in a household earning less than US$2,100 per month.
The wealth gap in Hong Kong — with the holdings of the 10 richest billionaires exceeding one-third of annual economic output — has been blamed for feeding unrest, including pro-democracy protests that paralyzed the city in 2014 and a riot in February that injured scores of police officers.
“The most important thing the government needs to think about is the options made available to the young people,” Li said. “Especially for the young people, you have to give them opportunities and hope.”
As to levies, Hong Kong has among the lowest corporate-tax rates in the world by capping them at 16.5 percent, compared with 40 percent in the US and an average 23.6 percent globally, according to accounting and advisory firm KPMG.
Unlike Buffett and Gates, Li opposed the idea charging higher tax rates for rich people.
“You mustn’t tax some people more and some people less, or else it’s chaos,” he said.
In the interview, Li singled out education and healthcare as areas that could benefit from additional funding.
The territory’s government plans to spend about a third of its HK$487 billion (US$63 billion) budget on those two fields this fiscal year.
The office of the Financial Secretary in Hong Kong said in an e-mailed statement that a simple, low-tax system was “the bedrock of Hong Kong’s success.”
The city has posted budget surpluses for a dozen consecutive years, it said.
Still, the government said it intended to keep an open mind and would not rule out any proposals to broaden the revenue base.
Hong Kong’s economy unexpectedly contracted 0.4 percent in the first three months of the year compared with the prior quarter — the steepest drop since 2011.
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