Tuesday, September 25, 2012

Private City in Honduras

I got pretty excited when I heard about a private city that is being built in Honduras.  The details are not all worked out yet, but I expect them to have open immigration policies like the good 'ol USA used to.  The only tax will be a property tax.  No income tax, no capital gains tax, no estate tax, no sales tax, etc.  I'm not sure how the tax structure will be designed, but I imagine a straight ad valorem setup where you pay about 5% of the value of your property each year...that way the government has an incentive to provide an area where people want to live.

Since there are not going to be many taxes, there won't be many public services.  I imagine that the garbage collectors will contract with each apartment building or office building or private residence.  Power will be generated by private companies and sold to individual customers.  It will be very easy to start a business.  There will not be a large police force, but I understand that the city can employ legitimate use of force from Honduras.  As an effort to provide stability, a 2/3 majority will be needed to change laws in the city.

The only "catch" that makes this place not "completely free" is one tiny little regulation that I personally have no problem with.  Each business will have to employ a minimum percentage of native Hondurans in order that a portion of the prosperity generated by this city benefits Hondurans.  I don't forsee this being a problem because the best and brightest ones will be hired and I anticipate that there will be an excess supply of highly qualified Honduran workers for at least a few years.

If this city fails like some haters think it might, then the only people who lose are the investors.  If the city performs well, it could transform that part of Honduras in much the same way that Hong Kong was transformed from a rocky island into a booming economy.

If this place turns out to be a success, maybe I can end up teaching at a university in this city...
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