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5
Friday, March 2, 1973
penalties for contravening those sections dealing with the financial
conduct of an insurance company could well be brought into line with the
recommendations of the Companies Law Revision Committee for infringement of
similar requirements in future companies legislation.
"So much for our future legislative intentions. I had better turn
now to the insurance industry and Wednesday's budget speech. If I had written
the budget speech when Tony Bennett telephoned me about this function several
months ago I would have politely declined the invitation, but here I am, regrettably.
You, or rather your policy holders, have gained to the extent that stamp duty
in respect of insurance policies has been abolished, at a cost to the revenue
of some $2.7 million per annum.
"But you, or rather your policy holders, have lost by the abolition
of insurance relief, one of the four selective allowances abolished in my budget
proposals for the reform of our system of salaries tax at a net cost to the
revenue of $151⁄2 mn. Now apart from my general dislike of selectivé
allowances in the context of our low tax system, I think I should make four
points to you. First, the original object of giving life assurance relief and the whole premise of subsequent legislation beginning at the end of the 18th century was to encourage thrift. Hong Kong simply inherited this type of all
allowance as one of the established forms of allowance without too much thought
being given to local circumstances and conditions. It was simply a traditional
type of allowance found in a British-type taxing system. allowance, peculiar to Hong Kong in the past, has been that the allowance was in the form of a straight deduction from income to reduce assessable income and
so the allowance had the effect of giving immediate benefit at whatever particular
schedular rate of tax was last effective on an individual taxpayer.
A feature of this
/Secondly