Tax Cuts in ... Hong Kong?

Looks like the Reagan Revolution has made it to Hong Kong.

Hong Kong tax cut to boost growth

Hong Kong has said it will cut taxes, in a move to promote further growth and lure foreign investment.

Leader Donald Tsang said taxes would be cut by 1 percentage point, to 16.5% for firms and 15% for individuals, in the first policy speech of his new term.

You just know the left, which detests tax cuts and deny their ability to encourage economic growth, cannot be happy about this.

So what is the expected result of the projects that will be promoted by this?

Such projects are tipped to create 250,000 jobs and, Mr Tsang said, could boost the economy by some HK$100bn yearly.

So, let me get this straight. Zimbabwe, which has embraced Marxism, is imploding, while Hong Kong, which is embracing capitalism, is growing by leaps and bounds.

Looks like the rest of the world of figuring out what the left has long denied.

Karl Marx has to be spinning in his grave.

War Erupts in Old Europe

It can only be described as a mad dash to embrace socialism's greatest heresy - tax cuts.

A tax-cut war is spreading across Europe as leaders of the Continent's biggest economies give up criticizing smaller neighbors for cutting business-tax rates and decide to join them instead.

The move toward lower levies on corporate profits in Spain, Germany, France and Britain is aimed at attracting companies and reinforcing the strongest economic expansion in six years. It comes after Ireland and new European Union members from Eastern Europe succeeded in attracting investment, and irking their larger rivals, with tax rates of less than 20 percent, among the world's lowest.

It's "tax cuts for the rich" and

Supporters of lower corporate taxes point to the success of Ireland, whose 12.5 percent rate, the lowest in the developed world, is down from 47 percent in 1988. That proved a magnet for such U.S.-based technology companies as Microsoft, Intel and Dell and helped Ireland's economy grow more than three times the rate of the euro area in the past decade, while still running a budget surplus in nine of the 10 years.

[Chief European economist Erik] Nielsen at Goldman Sachs [London] is betting that lower corporate taxes, by making businesses more competitive, will help euro-zone economies grow at a faster rate without heating up inflation. An improved business climate has helped raise that rate, the so-called speed limit, to as much as 2.5 percent for the bloc's economies, from 2 percent, he said.

That's consistent with the findings in a study of 86 countries last year by KPMG International, which showed corporate tax cuts allowed countries to attract and retain business investment with little loss of revenue. While governments collect less from companies, the difference is offset by new revenue stimulated by expanded hiring and spending, the study found.

But apparatchiks within the European Union are nervous.

Stefano Scarpetta, an economist at the Organization for Economic Cooperation and Development, said, "Evidence on the links between taxes and investment is not fully conclusive." The OECD, based in Paris, plans to finish a research project on the question by March.

Old Europe adopting the principles of Reaganomics.

Priceless.

Heresy on the Continent

During the past two weeks, tax reform became the centerpiece of government reorganization in the now-heretic countries of the Czech Republic and . . . France.

In the Czech Republic,

The Finance Ministry has been asked to draft by next year a new law on income tax that should be part of the second stage of the public finance reform and enter into force in 2010 at the latest, Finance Minister Miroslav Kalousek said after the cabinet meeting today.

Within the reform, the government plans a flat income tax at 15 percent that would be calculated from a "super gross wage" that includes social and health insurance.

But it gets even better.

Lower VAT is to be raised from 5 to 9 percent. Corporate tax is to be decreased from the 24 to 19 percent by 2010.

The government accepted the Greens' demand that households using gas for heating should be exempt from the environmental tax.

The tax will also not apply to the combined production of electricity and heat for household heating.

The tax changes are expected to simplify the business environment and reduce the tax burden on small businesses.

The minimum tax introduced in 2004 is to be cancelled and so are the monitored cash registers which businesses were to start using since January 2008.

Not surprisingly, such reform measures are vehemently opposed by the Social Democrats (CSSD) and the Communist Party of Bohemia and Moravia (KSCM).

In France, the government of newly elected President Nikolas Sarkozy has wasted no time in acting on the president's agenda of reforming . . . France.

French Prime Minister Francois Fillon said on Wednesday his government aimed to boost French growth to 3.0 percent using tax reforms to "shock" the economy into a faster track.

"We are going to propose a set of fiscal and financial measures designed to bring about a shock that will create growth," he told French radio Europe 1.

One of the more significant reforms will be to

. . . put a 50-percent cap on overall individual taxation.

Sarkozy's electoral triumph has been described by French historian Max Gallo, as a Victory of Reality over Utopia.

The ideology of the left, which has influenced, if not dominated, public and intellectual life in France since World War II, is in a deep crisis. Marxism ended long ago, and yet the French socialists haven't discovered any new answers.

Meanwhile, our Cousins across the Pond are also engaged in tax reform.

The government will push ahead with its much-maligned road pricing policy this week when it publishes proposals for pay-as-you-drive trials.

A draft version of the road transport bill will give local authorities the power to introduce road pricing in towns and cities. Ten areas in England considering schemes include Manchester and Birmingham, although ministers say a national scheme is at least a decade away.

And here's the jaw-dropper:

The local schemes are seen as a precursor to a UK-wide network that would track the movement of cars by satellite or roadside gantries, charging about £1.30 a mile on the busiest roads.

At current exchange rates, £1 equals two bucks.

The potentially radical reforms were attacked by motoring groups and the voluntary sector and even alarmed the Church of England.

Details emerged as the Government prepares to introduce a Bill allowing for road pricing pilot schemes in several parts of the country.

At present, anyone who is reimbursed for using their own car is entitled to claim 40p a mile for the first 10,000 miles without facing tax. After that anything paid over 25p a mile is subject to both tax and national insurance.

Revenue and Customs confirmed that the tax penalty would apply to those using their own cars for work.

And that would be on top of UK gasoline prices, currently about $7.44 per gallon (£3.75).