In 1939 the British colonial Hong Kong government attempted to introduce what it regarded as a “normal” income tax. The expatriate business community would reluctantly have gone along with this, but the Colony’s Chinese business community rebelled. Consequently, what Hong Kong got was a tax system which, judged by criteria widely regarded as axiomatic in the rest of the world, is deeply flawed. Nonetheless, it has proved remarkably successful. In particular, the rates of tax are much lower than in most other developed jurisdictions, yet the government has usually operated at a surplus and so has accumulated very large reserves. But the successes of Hong Kong’s tax system are troubling on two counts. First, the fact that Hong Kong’s theoretically inadequate tax system has proved so successful suggests that there might be something wrong with the theory. Secondly, the fact that not many Hong Kong people seem to want increased taxes is perhaps unsurprising; but most people seem to be content also with the balance of low taxes and relatively meagre public spending. This lends support to the theory that there might be something about Western systems of government that leads to higher levels of taxation and public spending than would accord with the populace’s actual preferences. This lecture updates Professor Littlewood’s bestselling book, Taxation without Representation: The History of Hong Kong’s Troublingly Successful Tax System (HKU Press, 2010).

About the Speaker:

Michael Littlewood is a Professor in the Faculty of Law at the University of Auckland. He is a New Zealander but has spent many years in Hong Kong. He has degrees in law and politics from the University of Auckland and a doctorate in tax from the University of Hong Kong. He is admitted as a barrister and solicitor in New Zealand, as a solicitor in England and Wales and as a solicitor in Hong Kong. He is an authority on New Zealand tax law, Hong Kong tax law, tax policy and tax history. Much of his work has been in the fields of tax planning, tax avoidance and international tax. His work has been published and cited in leading journals in New Zealand, the US, the UK, Australia and Hong Kong. He is a fulltime academic but has also from time to time provided advice to business interests and to the governments of several countries.

The Law Society of Hong Kong has awarded this seminar 1.5 Continuing Professional Development (CPD) points.