International Comparisons
22.
International comparisons of public expenditure demonstrate
the small size of the Hong Kong public sector. Comparison with
OECD countries show the Hong
the Hong Kong public sector to have a considerably lower share of GDP than all other OECD countries as shown in Appendix C. However the Hong Kong data is not compiled
on a consistent basis with other OECD countries and may
understate the role of the public sector.
23. There are a number of special factors which suggest that
expenditure and tax revenue, with all other factors constant,
should be lower in Hong Kong than in other OECD countries.
a) Hong Kong's geographical compactness may generate
economies of scale in the both the provision of services and
infrastructure.
b) The territorial political status of Hong Kong may have
lowered defence requirements below those of other OECD countries.
c) The direct and indirect tax burdens have been reduced by
the controlled sale of government land assets. Assets sales by other OECD countries, such as privatisation of public companies,
have in general been created by public expenditure in the first
instance and therefore raised the historical tax burden.
d) The level of private provision of goods and services in
Hong Kong
Kong is already at a much lower level than in other
developed economies which leads one to expect an a priori lower tax
burden.
Economic Advisers
22 October 1991