How to pay for Hong Kong - a brilliant solution

Submitted by Andrew Craig-Bennett on Sat, 05/01/2010 - 09:30

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:

http://books.google.com/books?id=FzP...bonham&f=false

There ought to be a statue. And Hong Kong Land and Cheung Kong ought to pay for it.

Comments

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Submitted by
Eddie (not verified)
on
Tue, 08/24/2010 - 20:45

I guess the question is WHY?

Why is it that the St John's Cathedral is the only freehold piece of property in HK?  Whilst the rest of HK, say, for example, the Catholic Cathedral, remains leasehold?  Is there any truth in "Tai Pan"?

there is in fact a second: a freehold property was granted to the Hong Kong University. See section 20 of Ordinance No. 10 of 1911. 

The Church of England, is the established or state church in England - with the monarch at its head.  It would not be unreasonable at the time it was built (1849) for the Government to give it special treatment in order to establish the State Church of England here in Hong Kong.

The law that Governs St. John's Cathedral is  Cap 1014

A Trust actually administers the property, and is not allowed to use the property for anything except a Church using the Church of England rites.  They cannot sell or transfer it to any other use.

I've found references to "Church of England Trust Ordinance" 1899 - but I am guessing there was an earlier one.

That's rather like the deed of trust for the Hong Kong Club, which stipulates that should the Club cease to exist for any reason the funds of the Club must be applied to founding a new Club on the same basis as the old one. This was passed to prevent the possibility of the Club being wound up by greedy members who wanted to get their hands on its money.