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Taxation Without Representation

The History of Hong Kong's Troublingly Successful Tax System

Michael Littlewood

Publication Year: 2010

This book tells an instructive tale of Hong Kong's tax system from 1940 (when taxes on income were first introduced in the territory) until the present day. For Hong Kong's own historians and political scientists, it supplies cogent but previously neglected evidence of the influence of the territory's business interests. For students of British imperialism, it provides a compelling case-study of relations between London and a recalcitrant colony. For Hong Kong's own tax profession, it corrects the notion that the territory’s tax system was the product of governmental design. And for tax theorists and taxpayers everywhere, it suggests how it might be possible to structure a combination of very light taxes and very low public spending so as to win broad popular support.

Published by: Hong Kong University Press, HKU

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pp. ix-x

If you stand on the Peak in Hong Kong, you are treated, on a clear day, to one of the best views in the world. Beneath you lies a thriving hothouse of humanity. It is at once a stunning instance of compressed urban design and a fabulous case study in the power of capitalism. Nowhere is the East Asian economic miracle more tangibly manifest. Yet you can also see more trees than from the centre of...

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pp. xi

In the course of writing this book, I was helped in many different ways by many different people. I am grateful to all of them. The book began as a doctoral dissertation (University of Hong Kong, Faculty of Law, 2001) and I am especially grateful to my supervisors, Dave Campbell (who inspired me to begin and to address some larger questions than I had originally intended), Andy Halkyard ...

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1. Introduction: The Thunder of History

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pp. 1-22

This book tells the story of Hong Kong’s tax system. This is worth doing for several reasons. The first of these is simply that it is impossible to understand why a tax system is as it is, except by understanding how it got to be that way. Secondly,and more importantly, tax history is not merely the history of the tax system but also the history of society generally, cut at a new angle. This way of looking at...

Part I: A “Partial” Income Tax

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2. Supporting the British War Effort: 1939–1945

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pp. 25-68

By the early twentieth century, the British government regarded it as self-evident that colonial governments ought generally to finance themselves by means of an income tax. Most British colonies therefore had income taxes. Hong Kong however was exceptional: the possibility of establishing an income tax in the Colony was first raised in the course of the First World War, but nothing came of the proposal ...

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3. After the War: 1945–1947

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pp. 69-103

The European powers, particularly Britain and France, naturally assumed that,once the war was won, they would resume their pre-war position in their Asian colonies. As Winston Churchill put it, he had not become Prime Minister “top reside over the liquidation of the British Empire”.¹ The Chinese (Kuomintang) government claimed that Hong Kong should be returned to China, but was hardly...

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4. The Governor Goes Native: 1947–1952

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pp. 105-124

The Hong Kong government had originally intended the Inland Revenue Ordinance1947 as a temporary measure, to remain in force for only a year or two pending the introduction of a normal income tax. By the time the Ordinance was enacted,however, it was already clear that it would have to remain in force for rather longer and by 1952 it had become evident that it would remain in force indefinitely....

Part II: More Money Than They Knew What To Do With

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5: A “Horse and Buggy” Statute: 1952–1961

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pp. 127-148

Sir Geoffrey Follows retired in 1951 and Hong Kong’s next three financial secretaries served for about a decade each: Sir Arthur Clarke from 1952 until1961; Sir John Cowperthwaite from 1961 until 1971; and Sir Philip Haddon-Cavefrom 1971 until 1981. Each dominated the process of tax reform whilst in office; each thought it obvious that a normal income tax would be better than the schedular...

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6. Cowperthwaite Is Reined In: 1961–1971

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pp. 149-176

Sir Arthur Clarke was succeeded by Sir John Cowperthwaite, who was Financial Secretary from 1961 until 1971. The decade was marked by the continuation of the remarkable economic growth which had begun in 1945.¹ As before, this growth produced “automatic” increases in the government’s revenues, from $1,062 million in 1962 to $2,981 million in 1970. This in turn enabled the government to increase...

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7. Sincere Failure or Successful Charade? 1971–1981

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pp. 177-205

From 1945 until about 1970, Hong Kong was a remote colonial trading post, a shambolic refugee camp, an emerging manufactory and a bastion against the spread of communism. That there was no basic tax reform during this period is unsurprising. By 1971, however, the Colony had already become, according to its government, “a stable and increasingly affluent society comparable with the...

Part III: If It Ain’t Broke….

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8. The Modern City-State: 1981–1997

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pp. 209-241

From 1981 to 1997, Hong Kong’s remarkable economic growth continued. In 1981, it was already an internationally important trading and financial centre, but by the time it was returned to Chinese rule in 1997, it was one of the richest cities in the world. The nature of the political process in the Colony had likewise been transformed, as can most clearly be seen in the composition of the Legislative...

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9. The Return to Chinese Rule: 1997–2009

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pp. 243-286

This chapter crosses the troublesome line between recent history and current affairs. The period begins on 30 June 1997, when Hong Kong ceased to be a British colony and became a Special Administrative Region (or SAR) of the People’s Republic of China. The transition was effected on the basis that, for at least fifty years, Hong Kong would be given a very special status, summed up in the slogan...

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10. Epilogue: Where to from Here?

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pp. 287-303

The system of taxation provided for by the Inland Revenue Ordinance has been extraordinarily successful. Most obviously, it has almost always, together with the other sources of public revenue, produced more money than the government has wanted to spend. More importantly, the Hong Kong people seem curiously content with the combination of very low spending and very light taxes. And the...

Note on Sources

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pp. 305-306


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pp. 307-333


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pp. 335-345


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pp. 347-361

E-ISBN-13: 9789882205352
Print-ISBN-13: 9789622090996

Page Count: 376
Publication Year: 2010