MONDAY, SEPTEMBER 10, 1979
MAKING TAX SYSTEM MORE PRODUCTIVE
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THE COROLLARY OF KEEPING THE TAX RATES AS LOW AS POSSIBLE IS THAT THE TAX SYSTEM SHOULD BE AS PRODUCTIVE AS POSSIBLE AT THOSE RATES, THE COMISSIONER OF INLAND REVENUE, MR. R.V. GIDDY, SAID TODAY (MONDAY).
IN A SPEECH TO THE ROTARY CLUB (VICTORIA), MR. GIDDY, WHO IS DUE TO RETIRE SHORTLY AFTER 17 YEARS IN THE INLAND REVENUE DEPARTMENT, SAID HE CONSIDERED THAT THE PRINCIPAL AIM OF THE TAX SYSTEM SHOULD BE TO PRODUCE REVENUE TO MEET THE GOVERNMENT'S COMMITMENTS.
HIGH TAXATION TENDED TO FEED ON ITSELF+, MR. GIDDY SAID.
+ONCE TAXES ARE INCREASED, EXPENDITURE IN A FISCAL VERSION OF PARKINSON'S LAW TENDS TO INCREASE TO MEET THEM. CLAIMS FOR CONCESSIONS AND RELIEF MULTIPLY- TAX AVOIDANCE AND EVASION BECOME FLOURISHING INDUSTRIES,+ MR. GIDDY SAID.
+AS A RESULT, TAX RATES HAVE TO BE FURTHER INCREASED TO COMPENSATE FOR THESE LOSSES AND IN THE END ONE FINISHES UP WITH A TAX BURDEN WHICH STRANGLES ALL INITIATIVE AND DESTROYS INCENTIVE AND ALTHOUGH IT MAY LEAVE THE RICH POORER AND EVEN THAT IS ARGUABLE, IT LEAVES THE POOR POORER, HE ADDED.
MR. GIDDY OFFERED A FEW SUGGESTIONS FOR CONSIDERATION IN MAKING THE PRESENT TAX SYSTEM OF HONG KONG MORE PRODUCTIVE.
FIRSTLY, HE SAID NON-CORPORATE OWNERS OF PROPERTY WERE ONLY PAYING TAX ON ESTIMATED RENTAL VALUES AT APRIL 1, 1976, NOT ON THE NET RENT RECEIVED BY THEM.
*THE LONG-TERM ANSWER SEEMS TO BE TO BASE ASSESSMENTS ON ACTUAL RENT RECEIVED. THIS WOULD BRING LANDLORDS INTO LINE WITH RECIPIENTS OF OTHER FORMS OF HONG KONG INCOME, INCLUDING CORPORATIONS WHO RECEIVE RENT,+ HE SAID.
+SECONDLY, THERE IS STILL SOMETHING DISTINCTLY UNSATISFACTORY ABOUT THE FACT THAT HUNDREDS OF MILLIONS OF DOLLARS OF INTEREST PAYMENTS ARE BEING CHARGED AGAINST HONG KONG PROFITS FOR PROFITS TAX PURPOSES BUT BECAUSE OF THE WAY IN WHICH THE LOANS WERE RAISED NO HONG KONG TAX IS PAID BY THE RECIPIENTS OF THE INTEREST,+ MR. GIDDY SAID.
+THERE IS A SUBSTANTIAL SUM OF REVENUE TO BE OBTAINED FROM THIS SOURCE, HE ADDED.
THE THIRD SUGGESTION, ACCORDING TO MR. GIDDY, WOULD BE TO OBTAIN A POTENTIAL ADDITIONAL YIELD FROM THE SHIPPING INDUSTRY WITHOUT COMPLETELY RESTRUCTURING THE INLAND REVENUE ORDINANCE, BY REMOVING THE SO-CALLED +CORPORATE VE IL+.
FOURTHLY, MR. GIDDY SAID HE WAS STILL AN ADVOCATE OF A COMPULSORY RETURN AND ASSESSMENT OF TOTAL INCOME DERIVED FROM FỒNG KÔNG.
HE SAID.....