Corporations should pay their fair share to improve Hong Kong society

Financial Secretary John Tsang Chun-wah has been teasing the public once again in this year's budget by dangling sweeteners to curry popular favour. But to view this as a sign of generosity is to miss the point; the government could actually seize the opportunity to reshape corporate social responsibility (CSR).

The government's responsibility is to spend cash wisely to help society, not just dole out small change now and then. Rather, they should be using taxpayers' money to address some of the city's more pressing long-term problems - like ageing populations and climate change. Hong Kong is unusual in its comparatively small tax base, which means companies and individuals like doing business here.

In Hong Kong and elsewhere, the private sector generally endorses corporate social responsibility by donating to charities and calling on staff to volunteer time to support worthy causes. There is nothing wrong with this; however, paying taxes should also be part of the CSR arena as, without tax money, a government cannot deliver its own form of social responsibility.

Hence, companies that hire sharp accountants to avoid paying tax are playing a double-sided game - on the one hand, publicly espousing responsible business and on the other, dodging responsibility to give money to the government to spend on society. This means companies claiming to practise CSR are cherry-picking pet causes and leaving to the government the less glamorous issues such as repairing aged infrastructure and building health care facilities for the elderly, all of which will matter in the future.

In developing countries, cash-strapped governments rely on aid from overseas institutions such as the World Bank and foreign investment. Private companies investing overseas do provide local benefits such as jobs and assets, but usually don't get involved in domestic concerns such as poverty and public health. This is where corporate social responsibility can be put to powerful use; companies should be made to pay a CSR levy to do business in a developing country. The levy should be overseen by an independent body to make sure the funds are disbursed to the right causes, and not into the pockets of less-than-honest government officials.