Justice and Taxation: From GST to Hong Kong Tax System

Abstract

Since the goods-and-services tax (GST) is a consumption tax, those with the same level of consumption will need to pay the same amount of GST, regardless how rich they are. To tax people according to their levels of consumption is to treat unequals (rich and poor with the same level of consumption) equally, thus unjust according to Aristotelian conception of justice. The GST reform intended primarily to broaden the tax base, yet to the detriment of tax justice, involving great administrative cost and discouraging consumption generally should not be an early step to take. Other more just and viable alternatives to GST should more justifiably be implemented before any discussion of the introduction of GST should be seriously considered. The issue of tax justice cannot be assessed by merely considering one specific tax, but must be evaluated in the context of other taxes in the tax system. From a broader perspective, justice in a tax system should not be isolated from how the tax revenue is to be used by the government. Justice, as a social value in public policy, is an indispensible consideration in the design of any tax system. Yet, it is far from the only one. In fact, there may be trade-offs among justice and other important considerations in tax design which leads to tax policy dilemmas. A delicate balance should be maintained among various conflicting considerations as a way out of such dilemmas.