Letters | More taxes or the environment? Why Hong Kong should not have to make that choice

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Bargain-hunters check out products on sale on December 10, the first day of the 2019 Hong Kong Brands and Products Expo in Victoria Park, Causeway Bay. Photo: Nora Tam

Published: 6:55am, 16 Mar 2020Updated: 6:55am, 16 Mar 2020

Financial Secretary Paul Chan Mo-po has pointed out that, as land revenue dries up, Hong Kong may face a dilemma between higher taxes or the environment (“Hongkongers to face choice between tax rise and environment, analysts say”, March 3). But this is a false choice, as there are many other ways for the government to raise revenue besides stamp duties.

I agree that heavy reliance on stamp duty from property transactions is not healthy and sustainable. Mr Chan is correct that other sources will be needed. But a consumer tax, as he suggests, would be very controversial.

A more viable and less regressive source are dividends. In many countries – including China and several European Union member states – dividends are taxed at rates ranging from 5 per cent to 30 per cent. Taxing dividends would be straightforward and progressive, as most people receiving dividends are in high income tiers.

Of course, a dividend tax would not be very popular with vested interests. Still, it would be far less controversial than a consumer tax or raising salary taxes – both alternatives that would primarily hurt the middle classes.

Over time, the government should also look into the possibility of capital gains taxes as a way to raise revenue.

Kristiaan Helsen, Sai Kung