[Good Government, Bad Government] Hong Kong: A Land of Small Government

If one were to name the best country in the world for doing business, Hong Kong would unquestionably be it. The Economic Freedom Network compiles an annual index of economic freedom, and Hong Kong has never relinquished its top spot since estimates began in 1980. According to the World Bank’s Ease of Doing Business Index, it ranks 4th among the 181 countries surveyed, following Singapore, New Zealand, and the United States. The reason Hong Kong can do so is that it pursues the ideal of a small but strong government.

True to its name as a free port, Hong Kong has no tariffs. Products from any country can be freely imported and sold. Bringing foreign money in or taking it out is also unrestricted. There are no limits on foreign ownership of stocks, either. Hong Kong is, in every sense, simply part of the world, and it does not erect tariffs or trade barriers.

Just as workers are free to choose what job they want, employers are also free to choose which workers they hire and dismiss. Nor does this lead to labor disputes, because both sides accept it as each other’s right.

Taxes are also low. Hong Kong applies a simple and very low tax rate. The current corporate tax rate is 16.5 percent, and the labor income tax rate is 15 percent. There is no tax on stock dividends or interest on bank deposits, and there is no property income tax, sales tax, or value-added tax. No taxes are levied on companies or individuals for profits generated overseas. A regulation-free environment and low taxes guarantee freedom of economic activity not only for Hong Kong’s citizens but also for entrepreneurs from other countries.

That does not mean, however, that unlimited freedom is permitted. To the extent that freedom is allowed, one must also take responsibility for the consequences of one’s choices. Equally important is the fact that freedom is allowed only within the bounds of not harming others. Infringing on others’ lives, property, and rights is not permitted. Anyone who breaks the law is thoroughly tracked down and punished. Laws governing basic public order are so strict that if citizens confront the police, it is classified as a “riot,” punishable by up to 14 years in prison. Indeed, one can even be subject to punishment merely for using the word “occupation” or for possessing wooden clubs.

Hong Kong’s government is small. It collects only a modest amount of taxes and keeps regulation to a minimum. But it is also a strong government that unfailingly does what it is supposed to do. A small but strong government—that is what has made Hong Kong the best country for economic activity.

Original title: [좋은 정부, 나쁜 정부] 작은 정부의 나라, 홍콩

Author: Center for Free Enterprise (CFE)

Date: 2008-12-22

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=18&idx=10720