Tax may help trickle-down effect in HK

The important role that the city of Hong Kong has played in the economic development of the mainland in the past 30 years or so has been widely attributed to the city government's guiding economic principle of positive non-interventionism - or small government, big market.

This principle has established a free-market economy distinguished by a low and simple tax regime and the authorities' disciplined maintaining of a balanced fiscal budget. Recurrent expenditure, including spending on social services, has been kept at levels below estimated recurrent income, usually with a wide safety margin. Under this guiding principle any form of pension scheme has been ruled out because it has been deemed more appropriate for people to keep their own money and use it in whatever way they see fit.

What's more, the city's leaders have made it a point never to subsidize any particular industry in the belief that private-sector business people know their sectors better than career bureaucrats. They have also abstained themselves with almost religious fervor from any role in the distribution of wealth, putting their faith in the trickle-down effect of the free market.