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1 Mrs. Reganra TAM: Sir, the most striking thing about the second Budget presented to this Council by the Financial Secretary is the structural changes to the existing tax system. The Financial Secretary, on the one hand hand, introduces reforms to the tax arrangements of direct taxes, mainly in salaries tax, and on the other hand, shows an intention to adjust the ratio of direct taxes to indirect taxes, by way of broadening the base of indirect taxes and introducing new forms of indirect taxes. Obviously such a move is designed with regard to the needs of Hong Kong in the long run and to bring about improvements to our overall fiscal regime.
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Sir, I do not oppose the structural changes in our tax system but I very concerned that these changes should 16 meet the objective as stated by the Financial Secretary
in his Budget Speech, that is, to move towards a more robust and equitable fiscal regime.
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20 [Firstly, on the tax arrangements of salaries tax, I have that clearly pointed out in the Budget debate last year there
eart are inequities in the present arrangements of the salaries
tax.
As a result, the not-too-well-off middle-income group who are unable to enjoy various social benefits are made to shoulder heavy tax burden. In a society that seeks equity and rationality, the drawback of the present
salaries tax system should be ratified as soon as possible.<
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rectified
For this new financial year, I am pleased to see that in formulating the tax arrangements the Financial Secretary
has been able to take into account the situation of the middle-income group and present various proposals that should be received favourably. These proposals include the reduction in the standard rate, a revision of marginal tax rates, an increase in the personal allowance, a lift in the chargeable income limit for the maximum