Wednesday, October 10, 2007

Hong Kong Leader: 16% Top Income Tax Too High

Hong Kong leader Donald Tsang announced today that they will cut the top personal income and corporate income tax to 15% and 16.5% in order for the territory to remain competitive. This should be viewed in the context of a tax cut implemented by arch-rival Singapore earlier this year.

Two decades ago, Tokyo was the dominant Asian financial centre. While Tokyo is still large in terms of market value of its companies, it is nevertheless becoming more and more of a "has been" financial centre. Tokyo almost exclusively list Japanese companies and the relative importance of the Japanese economy in Asia is rapidly declining due to its falling population, weak economic growth and weak yen.

Hong Kong is now in a fierce battle with Shanghai and Singapore about who will replace Tokyo as Asia's most important financial centre. Asian leaders, like Eastern European leaders, but unlike certain Western leaders -This means among others you, Fredrik Reinfeldt and Anders Borg- realize the importance of attracting and not discouraging high achievers.


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