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Abstract from

The Relationship Between Tax Reform and Political Reform in Hong Kong

Richard Cullen is a Visiting Professor in the Faculty of Law at the University of Hong Kong. He is also a Research Associate with Civic Exchange in Hong Kong and a Fellow of the Taxation Law and Policy Institute, Monash University, Australia. He has spent over a decade based in Hong Kong writing about Hong Kong and China.
Tor Krever is a Research Fellow at the Taxation Law and Policy Research Institute, Monash University. He does comparative research and writing across a range of public policy areas.

Tax reform is coming to Hong Kong -- it is now a matter of when rather than if. Hong Kong’s revenue raising system is out-dated. The most likely reform is the (eventual) introduction of a Goods and Services Tax (GST). If a GST is finally introduced (perhaps by 2009) it will represent the most radical tax reform in Hong Kong since 1947 when the Inland Revenue Ordinance put Hong Kong’s first income tax system into place. Hong Kong also has a comparatively outmoded political system. This conjunction of attenuated development in two fundamental public policy regimes raises several questions. A key question is, if major tax reform is to come, is this bound to add significant impetus to the calls for increased democracy in Hong Kong? The, perhaps surprising, answer is a qualified “no”. This chapter explains why. It argues that the current relationship between tax regime operation and political development is one where citizens are primarily concerned about “value for money” from the taxes they pay. If a government satisfies this test, tax reform initiatives within a non-democratic polity like Hong Kong, may be achievable without energising demands for major political reform.

(2006) 24 No 2 Law in Context 10-35

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