the
On providing incentives to the manufacturing sector, Financial Secretary said frankly in paragraph 96 of the Budget Speech that he 'does not believe that the selective inducement of an increase in capital allowances is what is needed at this time'. Instead, he 'considers that the proposed reduction in the rate of tax on corporate profits will provide appropriate and proper encouragement to all those in business'. Sir, I think this policy is very short-sighted. All along the Government has been advocating the renovation of plant and machinery in the manufacturing industry to improve productivity. Yet we all know that investments in plants, equipment and technology normally cannot come to maturity within one or two years. Even for proprietors of small and medium-sized factories, a repayment period of three to five years is usually required for the mortgage of one or two new machines priced at less than a million dollars. Hence, to promote productivity in the manufacturing sector, the Government should increase the allowances for the outlay as well as the depreciation of machinery so as to enable manufacturers to plan longer term investments. present, the Government reduces the profits tax slightly only when there is a surplus. It is likely that the tax will again be
It is, therefore, not a increased if the revenue diminishes.
positive approach to stimulate industrial investment.
I
At
Sir, on the question of taxation, I think we are now faced with an important issue which concerns the livelihood of the general public and has far-reaching implications and significant repercussions. This is the question of sales tax mentioned by the Financial Secretary in paragraph 50 of the Budget Speech. understand that the Government is considering widening the base for indirect tax and will present the proposals for public debate in due course. I am afraid I have to 'jump the queue' to express my views
I hope it will not be on this issue here out of a sense of duty. considered as a pre-emptive move.
tax?
First, why is it necessary to widen the base for indirect
I gather there are only three major reasons for this: (1) to