value
the benefit is assessed income by reference to the rateable value of the property up to a maximum of 10% of the employees income. Both to preserve the neutrality of the tax system and to preserve equity between taxpayers, all fringe benefits ought to be taxed at their true value, less a slight deduction for being forced to take income in kind.
Aggregation of income. Income derived from different sources is taxed under. different income tax schedules. Each schedule has different rules about offsets to income. This is a similar system to that which exists in the UK (schedule E for PAYE, schedule D for self employment etc). However, unlike the UK, the table of tax rates is applied separately to income arising under each schedule. When H the tax system was a uniform percentage rate, this separate assessment was not important. However with the introduction of tax rates which rise with income, tax payers could save tax by aggregating income. The report proposes that all incomes should be aggregated. This is the logic of a tax system where the marginal tax rate rises with income. The memorandum for EXCO points out that this is a
necessary step, if any further progressivity is to be introduced to the Hong Kong
tax structure.
Caterd
17 March 1977.
Richard Herd