Wealth Inequality in Hong Kong
Economic inequality is the unequal distribution of income between different social groups in society. It is a global concern as many people are often trapped in cyclical poverty with little chances to climb up the social ladder. The income inequality in Hong Kong creates a divide that separates the social ethnic groups— this is commonly known as the wealth gap, which signifies the difference in earnings between low-income, middle-income and high-income households. This article will explore the causes of the widening wealth gap locally in Hong Kong and discuss strategies to lessen the impact of the wealth gap on low-income households. In 2018, Hong Kong was the second richest city in the world, with a net worth of $355.5 billion, ranking sixth in GDP globally in 2011. Although Hong Kong is considered a wealthy developing city, it o suffers from various long-term economic is-
By Madison Lau | Photography by Aidan Keough | Layout by Maegan Wang
sues, namely economic and income inequality. This is a result ofHong Kong’s low tax policy, a policy that allows for its citizens to live there without paying the majority of the taxes. In 1947, two years after the Second World War, Hong Kong established the Revenue Ordinance in order to manage Hong Kong’s inland revenue and to fixate wartime measures. Therefore income tax was set at a staggeringly low 10% throughout the years, with many unsuccessful attempts to increase tax rates in Hong Kong. The low tax policy is not a feasible solution for income inequality because the tax system does not penalise wealth beneficial to Hong Kong’s upper class citizens, who earn over $40,000 HKD per month. This occurs because the upper class citizens attempt to avoid high tax rates, therefore minimising tax burden over the years. In contrast, low income households who earn under $9,500HKD per month remain in cyclical poverty. Since Hong
Kong utilizes an income tax system, low income class households generally pay a larger proportion of their income in tax than high income households. This makes it so that they constantly lack the resources and opportunities to increase their income, therefore trapping them in a cycle of poverty. The continuously increasing wealth gap has caused Hong Kong to reach ever higher measurements of wealth inequality. According to government statistics, Hong Kong’s GINI coefficient, a standard measurement for wealth inequality since the 1990s, was 0.539, the highest level since the 1970s. Based on an article by South China Morning Post, the wealthiest 10%, including Li Ka Shing, Lee Shau Kee and Henry Cheng in Hong Kong earned around 44 times more than the poorest 10% of households. In fact, Hong Kong is home to over 90 billionaires, 5 of which earned HK$23.6 in 2016 and 2017 alone. Despite this, Hong Kong also houses over 1 million people living in poverty. Although there is a stark difference between the “rich and poor” in Hong Kong, it has been disregarded by many government officials and corporate
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