Posted by Batgun on July 2, 2009, 4:52 pm, in reply to "Re: Inflation: Taxes, Taxes and more "Green" Taxes"
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Why paying your Hong Kong taxes should make you happy!
Wed, 2003-02-12 — Mr Tall
Mrs Tall and I recently paid our yearly Hong Kong taxes. I used to dread this day, since I have a real aversion to sending money to any government. You don’t want to get me started on my US taxes, for example!
But I’ve come to appreciate the Hong Kong tax system.
First, you can’t deny the beauty of its simplicity. I filled out my tax form this year in about nine minutes. That included time: to get a pen that wrote instead the dud I picked up first; watch several minutes of the news on TV; and to eat an entire Fuji apple while trying to avoid dripping on my tax form. I’m also not that bright when it comes to formulas and numbers and ratios and such, but the Hong Kong tax form is so simple even I’m not held back by it. Most people can probably finish theirs off in an ad break between TV shows. You really need only three bits of information: your income, which your employer will tell you about; your charitable donations, which the organizations you donate to will tell you about; and your mortgage interest, which your bank will tell you about. The situation gets more complex if you run your own business, of course, but that’s what accountants are good for.
Second, Hong Kong taxes aren’t so bad because income tax rates are so very, very low. No matter how you look at it, a 16% flat tax on income – with no tax on interest or dividend income or capital gains – is just one hell of a deal. In fact, the great majority of people in Hong Kong pay no income taxes whatever because their incomes don’t reach the first rung on the tax liability ladder, which means there are few worries about the system being unduly regressive. This may change as the government experiences some pretty ugly budget deficits, but for now, we’re still sitting pretty.
Third, I’m glad the Inland Revenue Department treats me like a grown-up. They don’t withhold taxes from your monthly paychecks. This means, of course, that once a year (actually, twice – you get to pay in two installments) you have to write fairly bank account-debilitating checks to the Hong Kong Government. To ready yourself for this fateful day, you’ve got to save money all year long, or you can end up in the deep stuff financially. This is better, though, than having a money-draining shunt permanently inserted in your pocketbook, which is what most governments do. The very act of writing the check also keeps you focused on just how tight your government’s hold on you really is. This far easier to ignore when your money disappears ‘painlessly’ each month. I’ll bet if people in the USA or UK had to write checks every year for their full tax liability, there would be some shifts in opinion regarding government spending. It’s not a coincidence, I guess, that small business owners, who comprise one group of Americans who do have to pay taxes ‘up front’, tend to be very economically-conservative voters.
The Hong Kong Inland Revenue’s main flaw is their inability to resist making people pay some of their tax bill in advance – it’s currently 75% of the current year’s tax bill. This gives the Hong Kong Government a massive no-interest loan every year. I figure if the Inland Revenue expects me to pony up a year’s worth of taxes at once, they can be expected to wait for it fair and square. After all, we’re all adults here, aren’t we?
http://www.batgung.com/taxes
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