Apparently, the cost of not paying enough tax is that 0.5% of the population of one of the most densely populated places on earth live aside from normal society. But reading about the town itself, I wonder whether it was not rather a case of a group of like-minded people who wanted to live outside the regimentation of "normal" Hong Kong life?
And how many people in the UK live outside the norm? I'd be surprised if our massive, benevolent, all-encompassing state didn't massively fail at least 0.5% of the population.
Anyway, the upshot of the debate was apparently we don't pay that much more tax in the UK than they do in Hong Kong.
But I'm not sure that's true. First of all, the rate of tax in Hong Kong is not 15%, it's 17%. Well, the top rate of tax is. There's actually a progressive tax system where the the first $100K isn't taxed (unless you're married, when it's $200K).
That sounds great, but HK$100K is actually only about £8000. Thereafter you pay 2% on the first $40K (£3000), 7% on the next $40K, 12% on the next $40K, then 17% thereafter. A bit of poking around on salary websites shows that it's not unreasonable to assume that the average wage is about $220K, so actually most people would be earning about £16000 and paying about £670 of that in tax.
However, in the UK, you have a personal allowance of £8100, thereafter you pay 20% of the rest, which is £1580, more than twice what you would pay in Hong Kong.
In addition, the other taxes and duties on normal life are either non-existent or trivial compared to us. Hong Kong has no VAT or Sales Tax, no Estate Duties, no Witholding Taxes. Duty on fuel is a risible 50p a litre, and duty on 1000 cigarettes is £135, compared to £155 PLUS 16.5% of the price. Beer and wine carry no duty and spirits stronger than 30% ABV are taxed at a flat 100% of the import price. So if you can import a bottle of whisky for less than £26 (and you definitely can), you pay less duty than you would in the UK.
I don't think it's unreasonable to say that taxes in Hong Kong are overall much less of a burden, especially on the less well-off. And given that a large portion of the residents of Hak Nam chose to live that lifestyle, and our massively more burdensome state still lets people fall through the cracks in large numbers, are we really getting value for our tax bill?