WEDNESDAY, FEBRUARY 16, 1977
THIRD INLAND REVENUE ORDINANCE
REVIEW REPORT PUBLISHED ******
THE REPORT OF THE THIRD INLAND REVENUE ORDINANCE REVIEW COMMITTEE WAS TABLED IN THE LEGISLATIVE COUNCIL TODAY (WEDNESDAY).
THE REVIEW COMMITTEE WAS SET UP FOLLOWING THE ANNOUNCEMENT BY THE FINANCIAL SECRETARY IN HIS BUDGET SPEECH LAST YEAR. UNDER THE CHAIRMANSHIP OF MR. J. ARTHUR JOHNSTONE, A FORMER COMMISSIONER OF INLAND REVENUE IN BRITAIN, IT STARTED ITS WORK IN JUNE 1976 AND PRESENTED ITS REPORT TO THE ACTING GOVERNOR IN MID-DECEMBER.
THE COMMITTEE DIFFERED IN TWO IMPORTANT RESPECTS FROM THE TWO EARLIER POST-WAR REVIEW COMMITTEES, IN THE FIRST PLACE, IT WAS SPECIFICALLY INSTRUCTED TO LOOK AT MATTERS WHICH HAD PREVIOUSLY BEEN CONSIDERED TO BE QUESTIONS OF FISCAL POLICY AND, THEREFORE, OUTSIDE THE TERMS OF REFERENCE OF THE EARLIER COMMITTEES, SECONDLY, MATTERS OF MACHINERY SUCH AS THE COLLECTION OF TAX, THE COMMISSIONER OF INLAND REVENUE'S POWERS, ETC. WERE PLACED OUTSIDE ITS TERMS OF REFERENCE AS WERE THE ACTUAL LEVEL OF TAX RATES AND THE LEVEL AND EXTENT OF PERSONAL ALLOWANCES.
BEFORE CONSIDERING THE COMMITTEE'S RECOMMENDATIONS, IT IS IMPORTANT TO NOTE THAT THERE WERE CERTAIN STRICTURES IN THE PREAMBLE TO THE COMMITTEE'S TERMS OF REFERENCE.
THESE WERE :-
+HAVING REGARD TO THE ECONOMIC CIRCUMSTANCES OF HONG KONG
WHICH DICTATE-
(A) A COMPARATIVELY LOW LEVEL OF DIRECT TAXATION-
(B) THAT THE SYSTEM AT GIVEN TAX RATES SHOULD BE AS PRODUCTIVE
OF REVENUE AS POSSIBLE- AND
(C) THAT THE RELEVANT LEGISLATION SHOULD BE SIMPLE AND
INEXPENSIVE TO ADMINISTER-+
THESE THREE THEMES, I.E. A LOW LEVEL OF TAX, THE SIMPLICITY AND THE PRODUCTIVITY OF THE SYSTEM WERE CONSTANTLY BORNE IN MIND BY THE COMMITTEE WHEN PREPARING THEIR REPORT.
AT THE OUTSET THE REPORT STRESSES THAT, FOR A PROPER UNDERSTANDING OF ITS RECOMMENDATIONS, IT IS NECESSARY TO REMEMBER THAT THERE ARE CERTAIN FEATURES WHICH ARE UNIQUE TO THE HONG KONG ORDINANCE. THESE ARE, FIRSTLY, THE EXISTENCE OF FOUR SEPARATE TAXES ON FOUR SEPARATE SOURCES OF INCOME SECONDLY, THE FACT THAT ONLY INCOME ARISING IN HONG KONG IS TAXED AND, THIRDLY, THAT THE RATES OF TAX ARE NOT AS PROGRESSIVE AS THOSE FOUND ELSEWHERE.
/THE MAIN