FINANCIAL STRUCTURE
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the overall effective rate of tax is limited to 15 per cent of the income before deducting personal allowances. These allowances are for the taxpayer $10,000; his wife $10,000; his first child $4,000; his second child $3,000; his third child $2,000. The allowance for the fourth to sixth child is $1,000 each, and for the seventh to ninth child $500 each. Single and married taxpayers are given an additional personal allowance of $2,500 and $5,000 respectively; however this allowance is reduced by 15 per cent of the amount by which the taxpayer's income exceeds the supplemented allowance until the point is reached where the entire additional allowance disappears. Apart from the deduction of expenses necessarily incurred in production of the income, and charitable donations up to 10 per cent of assessable income, there are no other allowances.
Property Tax is charged at the standard rate on the owner of land and/or building in Hong Kong by reference to estimated rental values. However there are exemptions, including property occupied by the owner for his residential purposes, vacant premises and property in certain undeveloped parts of the New Territories. Properties owned by corporations carrying on business in Hong Kong are exempted from paying Property Tax, because profits from their ownership are chargeable to Profits Tax.
Interest Tax is charged at the standard rate on interest arising in or derived from Hong Kong. This is basically a withholding tax deducted at source unless the interest forms part of the profits of a corporation carrying on a trade or business in Hong Kong, in which case it is subject to Profits Tax. Interest payable by the government, licensed banks and public utilities, not exceeding 34 per cent per annum, is exempt. This rate has been effective since October 30, 1978, in the case of the government and licensed banks, and March 1, 1975, in the case of public utilities.
A further feature of the Inland Revenue Ordinance is the right of a taxpayer to elect to be assessed on his total Hong Kong income, under what is known as 'personal assessment'. This aggregates his income from the four sources mentioned earlier and gives him the benefit of the same personal allowances and sliding scale of tax as would be applicable for Salaries Tax purposes. A set-off of tax paid on the individual sources of income is allowed.
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Estate Duty is imposed on that part of a deceased person's estate which is situated in Hong Kong. The rates of duty charged range from a minimum of seven per cent on estates valued between $400,000 and $500,000 to 18 per cent on those in excess of $3 million. Estates valued at less than $400,000 are exempt from duty. The yield for the year ended March 31, 1979, is estimated at $120 million.
With effect from March, 1978, Stamp Duty has been abolished on bank notes, cheques and bills of exchange, exchange contract cancellation notes, bonds, mortgages and deeds generally. Stamp Duty is now limited to duty on assignment of immovable property, leases, and share contract notes and transfers. The estimated yield for the year ended March 31, 1979, is $395 million.
Entertainments Tax is imposed on the price of admissions to race meetings and cinemas at rates varying with the amount charged for admission. This averaged about 28 per cent in the case of race meetings and eight per cent in the case of cinemas. The estimated yield for 1978–9 is $28 million.
Betting Duty is imposed on bets made on authorised totalisators or pari-mutuels and on the proceeds of Mark Six lotteries conducted by the Royal Hong Kong Jockey Club on behalf of the Hong Kong Lotteries Board. The rate of duty is charged at