Wednesday, March 1, 1972
41
CUT IN SALARIES TAX RATES PROPOSED
To Ease Burden On Middle Income Group
The reduction in the rates of salaries tax proposed by the Financial
Secretary today will bring relief to people in the middle income group, particularly
those with annual gross assessable incomes of between 340,000 and 380,000.
In announcing this tax concession in the Legislative Council, the
Hon. C.P. Haddon-Cave said the tax burden on this group was out of proportion
to the burden borne by the lower income groups who, quite rightly, get off very
lightly indeed. It was also out of proportion to the higher income groups who
enjoy the reducing impact of the low standard rate.
The Financial Secretary proposed to reduce the rates specified in the
Second Schedule to the Inland Revenue Ordinance so that the first step would be
2.5 per cent or one-sixth of the standard rate and each of the eleven steps
thereafter up to the maximum marginal rate of 30 per cent would likewise be a
multiple of 2.5 per cent. Thus an even gradation of the tax structure would be
achieved.
The effect of this recasting of the schedule, so far as personal allowances
are concerned, will be to push up the point at which net chargeable income reaches
the standard rate; in the case of a single man, from 354,000 to $62,000; in
the case of a married man, from $61,500 to $69,000; and in the case of a married
man with two children, from $65,500 to $73,000.
Explaining this tax concession, Mr. Haddon-Cave said: "This proposal
seeks to recognise that, with the inflation of incomes in recent years, the 30
per cent rate is catching people it was never intended to catch."
/A married