Industrial structural transformation is the right path
The government must indeed consider the issue of a too narrow tax base. The most correct way out is to transform the industrial structure, create new economic growth points, expand new industries, and expand GDP. After making the cake bigger, tax revenue will naturally increase. Currently, the Mainland is implementing the 11th Five-Year Plan, focusing on creating its own technology system and building its own brand. At the same time, the mainland has granted Hong Kong a zero-tariff policy. Under such a situation, Hong Kong needs to develop the last processing step and make full use of the mainland's semi-finished products to develop high value-added industries so that it can be sold back to the mainland market. This is a very big business. The promotion of important automobile parts, jewelry, aviation parts, watches, precision mechanical instruments, biochemical products, high-end fashion, high-end cosmetics, environmentally friendly materials, anti-epidemic drugs, communication equipment, and intellectual property rights can all form new industries. This is an important link for Hong Kong to cooperate with the motherland’s four modernizations. If these industries are not developed and there is no policy guidance, Hong Kong's industrial base will become increasingly narrow, with only banking and real estate remaining. Without the development of other industries, these two industries would be like fish out of water and a tree without roots. Hong Kong as a whole would gradually become marginalized, and Hong Kong would no longer be Hong Kong.
The imposition of sales tax will lead to the loss of tax revenue
Can the imposition of commercial sales tax solve the problem of excessive tax base? Narrow problem? Theoretically possible, but practically impossible. Because Hong Kong faces two problems. First, there is a huge gap between the rich and the poor. If we levy a sales tax, we will collect taxes from Hong Kong people. Second, Hong Kong faces fierce competition from neighboring regions. When we introduce a sales tax, people will aggressively expand the business of duty-free goods. , steal our tourists, and also attract Hong Kong people to spend money in their cities. As a result, we cannot collect the expected tax revenue, but lead to the loss of more tax revenue. The most obvious example is Macau, where shop rents and wages are lower than ours, and it is a free port. If they build large shopping malls in the new port and attract world-famous brands to settle in, tourists will come to Macau to travel and spend money. Bangkok, Kuala Lumpur, and Singapore are also attracting tourists from Hong Kong and building giant shopping malls. Can’t the SAR government see this situation?
Hong Kong still has a big weakness. The salary of civil servants is much higher than that of neighboring regions. The administrative costs are too high. For example, tourists can get tax refunds when shopping. How many more tax staff should we hire? How to solve it? Congestion caused by tax refund work at airports and land ports? For the poor, many congressmen have advocated exemption. If exempted, the main burden of sales tax will fall on the middle class.
If sales tax is imposed, some people will evade sales tax. Because sales tax can only be collected through cash transactions, many companies or media organizations can issue many exchange stamps to evade tax. Companies also use logarithmic methods to barter. For example, in order to increase advertising, TV stations and newspapers will match up with industrial production companies, and then issue exchange stamps of industrial products or food to employees as gifts, thus evading sales tax. As for cash transaction industries, restaurants and retail stores can reach a tacit agreement with customers and do not require invoices, so they do not need to pay sales tax. As a result, the government receives even less tax revenue. If the tax police are increased, government spending will further expand, which will weaken Hong Kong's competitiveness.
Rising costs hinder Hong Kong's development
Civil servants, accountants, and lawyers are the most advocates for the introduction of sales tax, because they Job opportunities will increase and income will increase. Under the sales tax framework, accountants can help every store and business audit the sales of goods in order to file tax returns. If there are any tax disputes, lawyers can litigate for taxpayers. But these activities do not create new wealth, but consume our social wealth.
Regions and countries that have levied sales tax, such as Europe and Japan, have levied sales tax, but the corporate profits tax and personal income tax have not been reduced, with an average of as high as 100%. Thirty to forty. Why? The reason is one-person-one-vote and free lunches. There are many political parties standing side by side. When the government cannot make ends meet, political parties must compete viciously in order to please voters. Different political parties write different checks. Increasing benefits and increasing the sales tax rate are the least painful and least likely to be opposed by voters. The initial tax rate is 5%, and it can be gradually increased to 17%. Hong Kong will enter a high-welfare society, which naturally means high taxes. As a result, costs will continue to rise like a wild horse, and Hong Kong will still have Is there a future?
When Japan, Australia, and Canada introduced sales taxes, the first reaction was that citizens’ purchasing power shrank and dissatisfaction with the government increased. As a result, government leaders People step down. The second reaction is that large department stores have stopped selling, and the number of foreign tourists coming to shop has dropped significantly. The third effect is that citizens flock to neighboring areas orTraveling and shopping abroad has resulted in massive outflows of foreign exchange. Don’t forget that there is Shenzhen next to Hong Kong. Hong Kong has levied sales tax. Hong Kong people will buy non-staple food, drink tea, durable electrical appliances, and even cars in Shenzhen. When the time comes, a new business will be started, with payment in Shenzhen and delivery in Hong Kong. Nowadays, the Internet is very developed. Residents do not have to go to Shenzhen to shop. They can also shop online and pay with credit cards. Finally, how much tax revenue can the SAR government collect from the sales tax?
When we collect taxes, we must have reverse thinking and wisdom, and consider new taxes. After the introduction of the levy, how will taxpayers react, how will neighboring cities react, and whether our competitive advantage will be increased or weakened? After figuring out this problem, the SAR government should know that sales tax can be discussed, but it cannot be implemented.
