WEDNESDAY, JANUARY 8, 1975
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UPPER LIMIT ON ANNUAL INTEREST RATE REDUCED
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THE LEGISLATIVE COUNCIL TODAY APPROVED A MOTION TO REDUCE FROM FIVE PER CENT TO FOUR AND A HALF PER CENT THE UPPER LIMIT ON THE ANNUAL RATE OF INTEREST WHICH CAN BE PAID BY BANKS FREE OF INTEREST TAX.
IN MOVING THE MOTION, THE FINANCIAL SECRETARY, THE HON. PHILIP HADDON-CAVE, SAID THAT THE EXEMPT RATE HAD HISTORICALLY DEEN LINKED WITH THE RATE PAID BY LICENSED BANKS ON SAVINGS ACCOUNTS.
+THIS IS BECAUSE THE PURPOSES OF THE EXEMPTION ARE TO ENCOURAGE SMALL SAVINGS AND TO AVOID THE ADMINISTRATIVE PRODLEM, AND COST, OF DEALING WITH TAX ON A VERY LARGE NUMBER OF SMALL INTEREST PAYMENTS, THE RECIPIENTS OF WHICH WOULD ALMOST ALL BE ELIGIBLE FOR REFUNDS UNDER THE PROVISIONS FOR PERSONAL ASSESSMENT. HE SAID.
MR. HADDON-CAVE RECALLED THAT THE EXCHANGE BANKS' ASSOCIATION REDUCED THE INTEREST RATE ON SAVINGS ANCOUNTS FROM FIVE PER CENT TO FOUR AND A HALF PER CENT PER ANNUM WITH EFFECT FROM JANUARY 1 THIS YEAR,
HE SAID: +IT IS DESIRABLE THAT THE EXEMPTION RATE FOR INTEREST TAX SHOULD FOLLOW SUIT, BECAUSE OTHERWISE SOME BANKS MIGHT CONTINUE TO PAY INTEREST ON SAVINGS ACCOUNTS AT FIVE PER CENT, AND THIS WOULD STRENGTHEN ANY TENDENCY FOR SAVINGS ACCOUNTS TÓ ATTRACT FUNDS FOR WHICH THE EXEMPTION IS NOT INTENDED.+
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