HONG KONG LEGISLATIVE COUNCIL
19 July 1989
香港立法局
-一九八九年七月十九日
55
pending implementation of separate taxation, there are no grounds for providing working married couples with an additional allowance that is not available to taxpayers in general.
Sir, concern has been expressed by both Mr. TAM and Mrs. LAM that some married couples will pay more tax under separate taxation than they would have paid on the same income had the aggregation system been retained. This concern is based, however, upon a comparison of the tax paid by a married couple under the interim working wife allowance provisions with that which will be payable under separate taxation. One of the reasons why a flat rate working wife allowance could not be adopted as a permanent solution to the so-called "marriage tax" is its inability to deal with the problem equitably at all levels of income. In particular, working wife allowance fails to provide some taxpayers with sufficient relief to negate the full effects of their "marriage tax" while it gives others a tax benefit exceeding their "tax". It is conceptually incorrect to compare the tax payable under the interim relief provisions with the tax payable under separate taxation to evaluate the effect of separate taxation on various classes of taxpayers. The more appropriate yardstick is to compare the tax payable under the legislation prior to the introduction of the interim relief measure with the tax payable under separate taxation. Using this comparison the majority of two-income married couples will, overall, pay less tax. For those adversely affected the joint assessment provisions are available to allow them to continue to be assessed jointly. Thus, while not all married couples will pay less tax under separate taxation none will pay more.
As Mr. Peter POON and Mrs. Miriam LAU have already pointed out when the re-introduction of the working wife allowance was proposed in the 1988-89 Budget, it was made clear that this was an interim measure designed to provide an immediate benefit to taxpayers while further consideration was given as to how separate taxation could best be introduced. There was never any intention that the allowance would become permanent. With the passing of this Bill all working wives will have separate taxation which, among other things, removes the "marriage tax" and the interim relief measure is no longer required or appropriate.
The proposition put forth by Mr. TAM to allow husbands and wives to opt in and out of separate taxation at random runs counter to the principles of independence and privacy in tax methods. In addition such a system would not be tenable in a low tax regime like Hong Kong because it would create unnecessary complexity in file maintenance, introduce uncertainty in the tax- payer base and place an onerous advisory role on the Inland Revenue
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