'Forget Liberty: Give Me Lower Taxes or Give Me Death!'

Hong Kong Offers Perks to Rich Residents While Stripping Away Their Rights
Jennifer ChanApr 07,2021,20:30

"Give me liberty or give me death!"- the great patriot Patrick Henry famously said. Of course, while those rowdy colonists did risk their lives to be free (even when sometimes enslaving others, mind you) most people throughout history would rather live unfree than not live at all--hence the existence of slavery since the dawn of time. And while Beijing is not looking to bring the Hong Kongese into bondage, it is tightening its grip on the city; this means freedoms once taken for granted by the Hong Kongese will undoubtedly be stripped away. So, how to keep the city's wealthy from leaving to the West as the Beijing bullying begins in earnest? With bribes in the form of tax breaks for the wealthiest of residents.

Beijing may not want Hong Kong to be the same freewheeling place it was, but it doesn't want the Asian financial hub's influence in global finance to diminish.

And since more political and personal freedom is not for the offering, China is offering tax incentives to keep rich bankers and financiers from fleeing.

“It is a one-party state, but they are pragmatic and they don’t want to hurt business,” Fred Hu, a former chairman of Goldman’s Greater China business, said of Chinese officials, according to The New York Times.

The big tax break on the offering is tailored to private equity, hedge funds, and other investors. In the IPO and secondary offering world, Hong Kong is currently booming, as Chinese companies are selling tens of billions of dollars worth of shares in Hong Kong. No one, including the Wall Street banks that back so many of these companies, wants that party to end. That said, more than one percent of residents have left after the much-covered national security law last summer was passed by Beijing. According to The New York Times, even executives who are sympathetic to the government have declined to speak publicly. The fear of getting into trouble for speaking out is real and palpable and something the people of Hong Kong tried to fight off with protests for nearly two years.

Sometimes, a balance is struck that promotes both Hong Kong business interests and the PRC’s national interests such as last week’s proposal to allow companies to conceal sensitive ownership data—something both Communist Party officials and companies can get behind. Critics say the measure, which could take effect as soon as May, would make it nearly impossible to trace the individuals involved in the companies that register in Hong Kong.

“The proposed law will facilitate corruption, fraud and other crimes,” said David M. Webb, a former banker and longtime investor in Hong Kong to The New York Times.

No matter what happens with this law or in the world of money and finance in Hong Kong more generally, one thing we can be sure of is that the city, for many of its most vocal and democratic-minded residents, will never be the same.

Topics:hong kong, china
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