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WEDNESDAY, FEBRUARY 25, 1981
CUTS IN BUSINESS TAX, ESTATE DUTY
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THE FINANCIAL SECRETARY, THE HON SIR PHILIP HADDON-CAVE TODAY PROPOSED CUTS IN BUSINESS TAXATION, ESTATE DUTY, STAMP DUTY ON CONVEYANCES OF LOW VALUE PROPERTIES AND AN INCREASE IN DEPRECIATION ALLOWANCES.
ON BUSINESS TAXATION, SIR PHILIP PROPOSED TO REMOVE THE HALF PERCENTAGE POINT LOADING LEVIED WITH EFFECT FROM THE YEAR OF ASSESSMENT 1976-77, THUS RETURNING THE EFFECTIVE RATE OF CORPORATION PROFITS TAX TO 16-1/2 PER CENT.
HE SAID, +LEST IT BE THOUGHT THAT THIS PROPOSAL WILL ONLY BENEFIT A FEW LARGE CORPORATIONS, MAY REMIND MEMBERS THAT THE NUMBER OF LIMITED LIABILITY COMPANIES PAYING CORPORATION PROFITS TAX IS PRESENTLY OF THE ORDER OF 18 000, MANY OF WHICH ARE SMALL FAMILY-OWNED BUSINESSES.+
THE COST TO THE REVENUE IN 1981-82 WILL BE $206 MILLION, OR 3.5 PER CENT OF ESTIMATED REVENUE FROM CORPORATION PROFITS TAX.
ON DEPRECIATION ALLOWANCES, THE FINANCIAL SECRETARY PROPOSED THAT THE INITIAL ALLOWANCES SHOULD BE INCREASED FROM 25 PER CENT TO 35 PER CENT AND THAT THE 33 HEADS WHICH ATTRACT DEPRECIATION ALLOWANCES BE RE-GROUPED UNDER THREE RATES OF ANNUAL ALLOWANCE OF 10 PER CENT, 20 PER CENT AND 30 PER CENT.
THESE TAX CONCESSIONS, SIR PHILIP SAID, ARE DESIGNED TO OFFER ENCOURAGEMENT TO MANUFACTURERS AND OTHERS TO RE-EQUIP AND UPGRADED THE IR PLANT AND EQUIPMENT AS OUR ECONOMY FACES UP TO THE CHALLENGES OF A CHANGING WORLD TRADING ENVIRONMENT. THE COST TO THE REVENUE OF THESE ALLOWANCES WILL BE $119 MILLION IN A FULL ORDINARY YEAR.
THE FINANCIAL SECRETARY ALSO PROPOSED TO RAISE THE LIMIT BELOW WHICH ESTATE DUTY IS NOT PAYABLE FROM $600 000 TO $1 MILLION FOR PERSONS DYING AFTER THE ENACTMENT OF THE NECESSARY LEGISLATION. THE COST TO THE REVENUE WILL BE ABOUT $13 MILLION IN 1981-82 AND PERHAPS $17 MILLION IN 1982-83.
ON STAMP DUTY ON CONVEYANCES OF LOW VALUE PROPERTIES, SIR PHILIP PROPOSED THAT THE LIMIT FOR THE FIXED CONCESSIONARY RATE OF $20 BE RAISED FROM $100 000 TO $250 000 WHILE THE LIMIT FOR THE FIXED CONCESSIONARY AD VALOREM RATE OF DUTY OF ONE PER CENT BE RAISED FROM $250 000 TO $500 000. ABOUT 48 000 FLAT PURCHASERS WILL BENEFIT FROM THESE HIGHER LIMITS AND THE COST TO THE REVENUE OF IMPLEMENTING THIS PROPOSAL WILL BE NO LESS THAN $155 MILLION IN 1981-82, THESE NEW LIMITS WILL BE EFFECTIVE FROM THE OPENING OF BUSINESS TOMORROW (THURSDAY) MORNING.
BILLS TO AMEND THE INLAND REVENUE ORDINANCE TO PROVIDE FOR HIS PROPOSALS IN RESPECT OF PERSONAL TAXATION, CORPORATION PROF ITS TAX, THE INITIAL DEPRECIATION ALLOWANCE FOR PLANT AND MACHINERY AND ESTATE DUTY WILL BE INTRODUCED INTO THE LEGISLATIVE COUNCIL AS SOON AS POSSIBLE.
THE COST TO THE REVENUE OF THESE FIVE CONCESSIONARY PROPOSALS INCLUDING THAT FOR PERSONAL TAXATION WILL BE $1 250 MILLION IN 1981-82.
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