Hong Kong’s Richest Man Calls for Higher Tax to Ease Wealth Gap
Hong Kong’s Richest Man Calls for Higher Tax to Ease Wealth Gap
Hong Kong’s richest man called for higher corporate taxes to help tackle wealth inequality and urged the government to think of ways of countering rising discontent among its younger residents by providing them with more opportunities.
"Tax companies an extra one or two percent, then a lot of the poor would benefit," CK Hutchison Holding Ltd. Chairman Li Ka-shing told Bloomberg Television’s Angie Lau in his first interview with international media since 2012. "The most important thing the government needs to think about are the options made available to young people."
Li, who says the city is going through its toughest times in two decades, is weighing in on the global income-inequality debate that’s prompted the likes of Warren Buffett and Bill Gates to call for higher taxes for the rich. While low taxation has helped put Hong Kong atop the IMD business school’s list of most competitive places to do business in the world, one-in-seven residents there live in a household earning less than $2,100 a month.
The wealth gap in Hong Kong -- with the holdings of the 10 richest billionaires exceeding one-third of annual economic output -- has been blamed for feeding unrest including pro-democracy protests that paralyzed the city in 2014 and a February riot that injured scores of police officers. That’s drawn the attention of China’s central government, which has ordered leaders in the former British colony to put aside political debates and focus on improving livelihoods.
As to levies, Hong Kong has among the lowest corporate-tax rates in the world by capping them at 16.5 percent, compared with 40 percent in the U.S. and an average 23.6 percent globally, according to accounting and advisory firm KPMG.
Unlike Buffett and Gates, Li opposed the idea charging higher tax rates for the rich.
"You mustn’t tax some people more and some people less or else it’s chaos," he said.
The tycoon, in his interview on Thursday, singled out education and health care as areas where officials could be funding more with additional taxes. The city’s government plans to spend about a third of its HK$487 billion ($63 billion) budget on those two fields this fiscal year.
Li, 87, arrived in Hong Kong from war-ravaged China in 1940 and started his fortune making plastic flowers to export to the West. At times claiming the title of Asia’s richest person, Li became a symbol of the city’s own rise, although his "Superman" image has been tempered by broader disillusionment over Hong Kong’s future and ties with the mainland.
City’s Leadership
Hong Kong’s economy unexpectedly contracted 0.4 percent in the first three months of the year compared to the prior quarter -- the steepest drop since 2011. The local retail industry, a key pillar of the local economy, has been hit by China’s slowdown and President Xi Jinping’s years-long anti-corruption campaign that hurt sales of luxury shops.
Li’s remarks come as the city prepares for legislative elections in September, the first since the Occupy protests and the emergence of small, but strident movement advocating independence from mainland China. In March, a committee of 1,200 electors will meet to select a chief executive for the next five years, a Beijing-controlled process at the center of the 2014 protests.
Chief Executive
The current leader, Leung Chun-ying, saw his approval rating in May fall to the lowest recorded by the University of Hong Kong’s Public Opinion Program. Some prominent local figures including lawmaker James Tien, founder of the pro-Beijing, pro-business Liberal Party, and Ricky Wong, chairman of Hong Kong Television Network Ltd., have urged finding an alternative candidate who can better bridge the city’s political divides.
Li represents the property and construction sectors on the chief executive selection committee and supported Leung’s rival, former Chief Secretary Henry Tang, in 2012. This time around, he said it was "very difficult to say" who would win the top job.
"Most importantly, this person has to understand Hong Kong and have the ability to fill Hong Kong with hope," he said. "In the past 20 years, Hong Kong has never seen such tough times."
--With assistance from Prudence Ho Samson Ellis and Yoko Shimizu To contact the reporter on this story: Fion Li in Hong Kong at fli59@bloomberg.net. To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Brendan Scott, Fion Li