Socialist Hong Kong?
Free marketeers in Hong Kong worry about creeping government growth.

(Deroy Murdock)


Deroy Murdock

Wong cites a recent local tax on plastic bags. One of the joys of shopping in Hong Kong is its 0 percent sales tax. A cashier here will ask for exactly what appears on a price tag — not a penny more.

However, anyone who wants a plastic bag to carry an item must pay HK$0.50 cents (US$0.06).

While this lightens consumers’ pockets, some argue for the environmental benefits of keeping sacks off the streets and out of landfills. Others marvel at the exclusions and exceptions that have arisen since the tax arrived in July 2009. “I never thought the apparently simple rule on [the] plastic bag levy would be this complicated,” Travel Wire Asia’s Elmer Cagape wrote last December. “Prepare for more twists and turns.”

Hong Kong’s government requires most retailers to collect the tax. However, oddly enough, they now may keep the money themselves, reportedly in hopes that they might do something green with it.

“The plastic-bag tax is not a real big deal, but the way they are implementing it is,” Wong says. “In the second stage of the plastic-bag levy, they want to tax the plastic wrapping around greeting cards.”

Perhaps it depends on what the meaning of the word “bag” is.

More worrisome is Hong Kong’s first minimum-wage law. It began, appropriately enough, last May Day. Previously, the government allowed consenting adults to agree on the price of labor. Now, officials have decided that no one may work for less than HK$28 (US$3.60) per hour.

Whither Hong Kong?

A competition law also is in the works. G. Andrew Work, a Canadian expatriate who co-founded the Lion Rock Institute, laments that “There doesn’t seem to be any capacity to learn from the mistakes of the Western economies.” He explains that the proposed measure “seems to be a mix of the worst elements of various legislations around the world. It has the vagueness and arbitrariness of the American laws. It has the punitive qualities of the European legislation, but is even more draconian. And then it has the all-encompassing government exemptions that you see in Singapore. It’s the worst of all possible laws.”

This legislation assumes that Hong Kong lacks competition. This is beyond laughable in a place where entrepreneurs cram every available crevice and virtually trip over each other to market their wares to willing consumers. Indeed, Work says, “We have a Consumer Council that looks at these things. Every time they get asked to do a study, they come back and say, ‘Well no. We can’t actually find anything or show any evidence of anything.’”

Indeed, after rising through most of the 2000s, total complaints to the Consumer Council peaked in 2008–09 at 44,409 and plummetedby 34.9 percent to 28,914 in 2010–11.

Meanwhile, entrepreneurs fret that large players may use a competition law to bludgeon them.

“Many big companies have their own legal consultants or legal departments to handle investigations and lawsuits,” Stephen Kwok Chun-pong, president of Hong Kong Small and Medium Enterprises Association told Time Out Hong Kong. “But small and medium companies don’t, and they have to employ all these legal resources that will incur excessive costs. It will lead to two ends: either they will close down or they will charge higher on their products and make consumers pay for the extra costs. This is how the Competition Bill can help the sharks prey on us.”

Still, the fear of limited competition — call it potential anti-trust — fuels this bill. Ahead of an expected legislative vote on this measure in May, opposition to it is building among Hong Kong’s businesses. So, it still might sink.