CHEERS, HONG KONG
June 27, 2008
As the U.S. presidential candidates start fighting it out over economic policy, we should pause for a moment and raise a glass of fine wine to Hong Kong's government. For all their own policy foibles, Hong Kongers still understand one thing that sometimes eludes American politicians: Tax cuts stimulate the economy, says the Wall Street Journal.
In February, Hong Kong eliminated its 40 percent wine duty, and since then the country has seen benefits start pouring in:
- Hong Kong has instantly flourished as an Asian wine hub.
- An auction last month fetched HK$64 million (about U.S. $8.2 million), an Asian record, on the heels of an auction in April that brought HK$11.5 million (about U.S. $1.5 million).
- The government's investment promotion agency says five wine-related companies, including dealers and storage companies, are considering opening Hong Kong offices.
- All of this will create an increasing number of new jobs over time, say industry insiders.
- Wine traders say the tax cut has been the main source of growth for the Hong Kong wine trade.
If only other politicians elsewhere were as smart, says the Journal. Of America's two presidential candidates, Barack Obama supports nearly doubling the capital gains tax, while John McCain was cool to the Bush tax cuts (though at least he now says he's seen the error of his ways). Hong Kong's government is far from perfect on the economic policy front, but it deserves a hearty toast for the free lesson it's just offered on the stimulative value of low taxes.
Source: "Cheers, Hong Kong," Wall Street Journal, June 27, 2008.
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