Taxing land rent, lowering other taxes : the case of Hong Kong

Lok Sang HO*, Wai Chung Gary WONG

*Corresponding author for this work

Research output: Journal PublicationsJournal Article (refereed)peer-review

Abstract

Purpose
The purpose of this paper is threefold: to study if Hong Kong’s fiscal revenue is closely related to land rent; to assess if a fiscal regime relying on taxing land rent is good for the economy; and to explore if Hong Kong adopts a high land price policy.

Design/methodology/approach
In this paper, first, theoretical and conceptual exploration into the Henry George Theorem is made to investigate if a single tax regime is conceptually feasible. Second, time series econometric study investigates into the determinants of Hong Kong’s fiscal revenue and Hong Kong’s public expenditures. Granger causality tests are conducted to study the direction of causality.

Findings
Hong Kong does not have a high land price policy; it uses a multipronged approach to tax land rent, which cannot be precisely identified; its low tax regime is good for the economy and contributes to a virtuous circle: taxing land rent, low taxes, vigorous economy, higher land rent and low taxes.

Originality/value
This study uses a familiar methodology on a subject on a policy area that has not been studied before.
Original languageEnglish
JournalAsian Education and Development Studies
Early online date24 Dec 2019
DOIs
Publication statusE-pub ahead of print - 24 Dec 2019

Keywords

  • Efficiency
  • Granger causality
  • Henry George Theorem
  • High land price policy
  • Housing prices
  • Tax regime

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