How history has shaped the Hong Kong revenue regime 1

This chapter is, essentially, a case study of the long-term impact of globalization on the development of the revenue regime in Hong Kong. ² ‘Revenue regime’ is the broad term which we use to denote the full array of government money-raising mechanisms (apart from fines and debt) deployed, historically and today, in Hong Kong. As we explain below, Hong Kong has, from the start of the period of its modern history, relied, importantly, on mechanisms other than conventional taxation to raise public revenues. The two most notable non-tax sources of public revenue, historically, have been government dealings related to opium and land. Opium-trade revenues had ceased to be a key source of government income in Hong Kong by the 1920s. Direct and indirect land-transaction revenues remain a notable feature of the current Hong Kong revenue regime. We use the term ‘tax system’, below, to refer to that part of the broad public revenue system which relies on recognizable forms of direct and indirect taxation. ³