Tax System Design and the Instructive Case of Hong Kong
33 Pages Posted: 21 May 2014
Date Written: December 15, 2010
Hong Kong’s tax system is one of the world’s most successful. This article looks at what might be learned from it. The main lessons are (1) that it is possible to structure a combination of very light taxes and very low public spending so that it enjoys very broad public support; (2) that it is possible for a developed jurisdiction’s tax legislation to be simple (say 200 pages); (3) that a flat-rate personal consumption tax (similar to that proposed by Robert Hall and Alvin Rabushka) is feasible; and (4) that the convenience of most countries’ collection mechanisms (notably PAYE) may come at a much higher cost than is usually supposed.
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