Hong Kong tax systems seen as fairest

Jun 30, 2008, 1:36 GMT

Singapore - Hong Kong is seen as having the fairest and most transparent tax system out of six major developed economies, followed by Singapore, a study said on Monday.

Canada emerged third, while the United States, Australia and Britain rounded out the six, said the study by the Association of Chartered Certified Accountants (ACCA).

Respondents ranked the various tax systems according to how fair they were relative to one another, looking at simplicity, transparency and the burden of each regime.

Respondents in Hong Kong and Singapore had an overall positive view of fairness, while respondents in Britain, Australia and Canada felt their systems were less fair and somewhat complex.

Those in the US maintained the tax system was complex but not necessarily unfair.

'The message from our research is for governments to reduce the volume of laws, directives and regulations that contributes most to complexity,' said Professor Francis Chittenden of Manchester Business School, who wrote the report published in The Business Times.

'There is a fundamental issue for governments around the world to decide the purpose and structure of tax systems and, importantly, to communicate the rationale behind these decisions,' he said.

Trust is crucial for a tax system to work in any country, the report said. The ACCA said that governments should create an environment in which citizens believe they have played a part in setting the system.