Financial Center For The Asian Pacific Region

Decent Essays

Chapter 1 Introduction
1.1 Background
Hong Kong has been emerging as a major financial center for the Asian-Pacific region since around 1970(Jao, 1979). However, wealth gap and income inequality is always a criticized issue. According to Hong Kong Government Fact Sheet document, Gini coefficient, which is a common figure using on the measurement of household income, increase by 0.004 from 0.533 in 2006 to 0.537 in 2011. Oxfam Hong Kong reported that in Hong Kong, the richest 10% who earn a HK$100,000 median monthly income gains nearly 29 times than the poorest 10% gain per month, while the same comparison result in 2013 is 26 times and 26.4 times in 2014. Bloomberg Billionaires Index also shows that the top 10 billionaires are now having …show more content…

Hong Kong tax base is phenomenally narrow and limited under the international standards. (Financial Services and the Treasury Bureau, 2006). As the Government tax revenue are mainly depends on Profit tax, Salary tax and Stamp Duties, which are nearly 90 percents of the total tax revenue, resulting that Government financial structure become unhealthy. (Hong Kong Inland Revenue Department, 2015). Moreover, the tax revenue is also fluctuated. Profit tax contribute around 45 percents of the total revenue collected (HKIRD,2015), is greatly influenced by the economic environment, and which shown after the financial crisis that Hong Kong tax revenue drop 4.6% in 2008-2009 and 6.5% in 2009-2010.(HKIRD,2010).

Back on 8 March, 2000, Mr, Donald Tsang Yam-kuen, who severed as Financial Secretary, fifth budget for the Finance Year 2000-2001 in Legislative Council of Hong Kong stated that it is an issue of broadening the tax base. 3 month later, HKSAR Government promulgate that a 16 members Advisory Committee on New Broad-Based Taxes Is formed, lead by Mr Moses Cheung. Mr Donald Tsang also announced that the Advisory Committee is to advise on several question, involve what types of broad-based tax may suitable for Hong Kong, and should it be introduced including a consumption-based tax. A formation of Task Force to Review the Public Finances is also announced, and is responsible to exam the details that government’s from 1998-19999 and 1999-2000 up to 2002-2003 on the tax base,

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