WEDNESDAY, MAY 8, 1974.
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CALL FOR TOTAL ABOLITION OF ESTATE DUTY
ACTING FINANCIAL SECRETARY DISAGREES
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THE HON. WOO PAK-CHUEN TODAY CALLED ON THE GOVERNMENT TO TOTALLY ABULISH ESTATE DUTY IN HONG KONG.
HE WAS SPEAKING IN SUPPORT OF THE ESTATE DUTY CAMENDMENT) BILL 1974 WHICH WAS PASSED INTO LAW TODAY. THE LEGISLATION SEEKS TO INCREASE THE EXEMPTION LEVEL FOR ESTATE DUTY FROM $200,000 TO $300,000.
DESCRIBING ESTATE DUTY AS A BAD FORM OF TAXATION FOR HONG KONG, Mr. WOO SAID: +AS A REVENUE-RAISER IT IS DIFFICULT TO PREDICT IT HAS ADVERSE EFFECTS ON OUR ECONOMY AND IT CAN WORK HARSHLY UN INDIVIDUALS.+
MR. WOO QUOTED THE FINANCIAL SECRETARY, WHEN HE PROPOSED IN HIS BUDGET SPEECH IN 1972 THE REDUCTION OF THE MAXIMUM RATE OF ESTATE DUTY TO 15 PER CENT, AS SAYING: +IT WILL ALSO HELP TO DISCOURAGE HONG KONG RESIDENTS FROM TAKING AVOIDANCE ACTION BY TRANSFERRING ASSETS OVERSEAS BEFURE DEATH.+
MR. WOO FELT THAT THIS REASONING WOULD BE MORE APPROPRIATE TO THE TOTAL ABOLITION OF ESTATE DUTY THAN TO THE MERE REDUCTION OF THE MAXIMUM RATE.
+FURTHERMORE, IF NO ESTATE DUTY IS PAYABLE IN HONG KONG THERE IS ALSO THE BENEFIT OF ENCOURAGING PEOPLE FROM OVERSEAS TO BRING IN THEIR ASSETS FOR INVESTMENT OR FUR BUSINESS IN HONG KONG. THIS WILL CERTAINLY IMPROVE OUR PRESENT FINANCIAL 'AND ECONOMIC POSITION, + HE SAID,
IN HIS REPLY, THE ACTING FINANCIAL SECRETARY THE HON, DAVID JORDAN DISAGREED WITH MR. WOO ON THIS ARGUMENT.
+1 THINK A POINT OF BALANCE CAN BE FOUND WHERE WE DO NOT NEEDLESSLY FOREGO NECESSARY REVENUE BUT DO NOT RAISE IT AT RATES THAT POSITIVELY ENCOURAGE AVOIDANCE, OR DISCOURAGE INVESTMENT,+ MR. JORDAN SAID.
HE ALSO DOUBTED WHETHER HONG KONG COULD AFFORD TO DISPENSE WITH SOURCES OF REVENUE BECAUSE THE YIELD WAS UNPREDICTABLE. +WE SHALL AT LEAST FOR SOME YEARS AHEAD JUST HAVE TO MAKE THE BEST OF THAT.+
COMMENTING ON MR. WOO'S SUGGESTION THAT THE DUTY HAD ADVERSE EFFECTS ON HONG KONG'S ECONONY, MR. JORDAN SAID: +I MUST SAY THAT WHILE THIS MAY BE POSSIBLE, IT SEEMS TO ME THAT THE FACT THAT WE HAVE OVER THE YEARS REDUCED THE MAXIMUM RATE PROM ITS PEAK OF 52 PER CENT SHOULD HAVE AT LEAST CONSIDERABLY REDUCED THE LIKELIHOOD OF THIS TAX PRODUCING ANY ADVERSE EFFECTS ON OUR ECUNUNY.+
ON THE BELIEF THAT THE TAX COULD WORK HARSHLY ON INDIVIDUALS, HE SAID THIS MIGHT BE SO, BUT A GOOD DEAL HAD ALREADY BEEN DONE TO. MITIGATE THE EFFECTS.
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