Debate Magazine

2014 Index of Economic Freedom

Posted on the 29 May 2014 by Markwadsworth @Mark_Wadsworth

From The Heritage Foundation:
Free (80 - 100)
1. Hong Kong
2. Singapore
3. Australia
4. Switzerland
5. New Zealand
6. Canada

What do the first two have in common, apart from being Chinese-populated city-states and former British colonies..?
Well, in both, the government owns the freehold to all or nearlly all land and merely grants long leases (usually 30 years in HK and up to 99 years in the case of Singapore). Both governments collect a significant chunk of land rents arising, either as true rent, leasehold sales, annual land value taxes/business rates, building license fees, stamp duty, taxes on property developers etc.
As a result, income tax rates for everybody else are pretty low and sales tax more or less non-existent.
It is true that neither pays out much cash as welfare payments, but those are not really necessary. Apart from having more of a work/family ethic, the lower taxes on output and employment means that there is, er, more output and employment.
Just as importantly, there is a ready supply of low-cost social housing (to rent or buy) so there is an implied welfare system - instead of paying top whack unregulated rent/mortgage and getting cash welfare, you just pay a lower net rent/mortgage.
In principle, it comes to the same thing, only the Western system is visible transfers and the HK and S systems are invisible transfers, but they are very real transfers nonetheless*.
So for when these Faux Lib's say that HK and S are such success stories because they have low rates of income tax (hooray!) and no welfare system (ho-hum), you can politely tell them that they are fucking idiots who are missing about two-thirds of the true picture.
* It's a bit like the Homeys complaining about social tenants claiming Housing Benefit. That is visible, but not actually a net cost to the taxpayer. They could make this cost invisible by simply dropping social rents to a few quid a week, hey presto, that's £12 billion off the DWP welfare bill (and a reduction of £12 billion in rent receipts recorded by local authorities and Housing Assocations).

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