Li Ka-shing calls for higher corporate taxes in Hong Kong

Mr Li, who is worth US$28.9 billion, is opposed to higher taxes for the rich, saying it will be "chaos".
Mr Li, who is worth US$28.9 billion, is opposed to higher taxes for the rich, saying it will be "chaos".

HONG KONG • Hong Kong's richest man has called for higher corporate taxes to help tackle wealth inequality, and urged the government to think of ways of countering rising discontent among its younger residents by providing them with more opportunities.

"Tax companies an extra 1 or 2 per cent, then a lot of the poor would benefit," CK Hutchison chairman Li Ka-shing told Bloomberg Television's Angie Lau in his first interview with international media since 2012.

Mr Li, who says the city is going through its toughest times in two decades, is weighing in on the global income-inequality debate that has prompted the likes of billionaires Warren Buffett and Bill Gates to call for higher taxes for the rich. 

While low taxation has helped put Hong Kong atop the IMD business school's list of most competitive places to do business in the world, one in seven of the city's residents lives in a household earning less than US$2,100 (S$2,800) a month.

The wealth gap in Hong Kong - with the holdings of the 10 richest billionaires exceeding one-third of annual economic output - has been blamed for feeding unrest, including pro-democracy protests that paralysed the city in 2014 and a February riot that injured scores of police officers.

That has drawn the attention of China's central government, which has ordered leaders in the former British colony to put aside political debates and focus on improving livelihoods.

"The most important thing the government needs to think about is the options made available to the young people," Mr Li said. "Especially for the young people, you have to give them opportunities and hope."

Hong Kong has one of the lowest corporate tax rates in the world, capping them at 16.5 per cent, against 40 per cent in the US and an average 23.6 per cent globally, according to accounting and advisory firm KPMG.

Unlike Mr Buffett and Mr Gates, Mr Li opposes higher tax rates for the rich, saying: "You mustn't tax some people more and some people less or else it's chaos."

Mr Li, 87, arrived in Hong Kong from war-ravaged China in 1940 and started his fortune making plastic flowers to export to the West. He is worth US$28.9 billion, according to the Bloomberg Billionaires Index.

His remarks come as the city prepares for legislative elections in September, the first since the Occupy protests and the emergence of a small, but strident movement advocating independence from mainland China.

In March, a committee of 1,200 electors will meet to select a chief executive for the next five years, a Beijing-controlled process at the centre of the 2014 protests.

Mr Li said it was "very difficult to say" who would win the top job as the approval rating of current leader Leung Chun Ying plunged to a new low in May.

"Most importantly, this person has to understand Hong Kong and has the ability to fill Hong Kong with hope," he said. "In the past 20 years, Hong Kong has never seen such tough times."

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on June 23, 2016, with the headline 'Li Ka-shing calls for higher corporate taxes in Hong Kong'. Print Edition | Subscribe