How to pay for Hong Kong - a brilliant solution
Now the time has come to talk about taxes.
The hero of this part of the story is this man, the first wholly sucessful Governor of Hong Kong:
He looks the very picture of the booted British Imperialist, doesn't he?
In fact, Sir Samuel George Bonham, son of a Master Mariner in the HEIC who was lost at sea in a typhoon in command of the Indiaman "True Briton" in the South China Sea in 1810, was a softie. His predecessors as Governors, Sir Henry Pottinger and John Francis Davis, had tried to govern firmly but fairly and had done a fairly good job of getting themselves hated by everyone. Davis even spoke Chinese, but that didn't help him. Their big mistake was to try to raise taxes in order to run the place, thereby offending Chinese and English alike.
Sam Bonham was quite different; he was calm, unruffled and gentle and he had a Really Good Idea.
The Good Idea was this:
The only freehold building in the whole of Hong Kong (it was, in fact, completed during his Governorship) was the Anglican cathdral of St John.
Everywhere else was leasehold.
Today, even the Cathedral is leasehold (999 years!)
The Government of Hong Kong owns all the land, and leases it. The Government even owns the seabed, and will lease you the right to reclaim it and build on that, sometimes.
So now you know why Hong Kong has such low, flat, corporate and personal income taxes and no purchase or value added tax at all.
And you know why Hong Kong has no favelas or shanty towns (well, it did have for a while, but we'll come to that, presently) and why it has beautiful, unspoiled, countryside, right up to the tower blocks.
In effect (and this is the great trick) the property companies are the Government's tax farmers. The system depends on there never being enough building land, on very tight planning legislation, and on the economy continuing to expand and to fuel a demand for more land for building on.
Sam Bonham foresaw this.
He did OK; he was happily married, knighted, made a baronet and died four years after he retired.
More on Bonham here:
There ought to be a statue. And Hong Kong Land and Cheung Kong ought to pay for it.