MONDAY, MARCH 9, 1981
+HONG KONG IS NO TAX HAVEN, SIR PHILIP
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HONG KONG HAS NO INTENTION WHATSOEVER OF ADAPTING ITS REVENUE LAWS SPECIFICALLY TO ATTRACT PARTICULAR TYPES OF BUSINESS OR INVESTMENT, THE DEPUTY TO THE GOVERNOR, SIR PHILIP HADDON-CAVE, SAID TODAY (MONDAY).
+WE HAVE ALWAYS RESISTED SPECIAL PLEADINGS TO ABANDON OUR NON-DISCRIMINATORY APPROACH AND INTEND TO GO ON AVOIDING PREFERENTIAL FISCAL DISTORTIONS AND, I WOULD ADD, OTHER DISTORTIONS AS WELL, HE TOLD THE OPENING SESSION OF THE HONG KONG INVESTMENT SEMINAR 1981.
SIR PHILIP WAS ADDRESSING THE SEMINAR, ORGANISED BY THE WORLD MONEY SEMINARS LTD, IN HIS CAPCITY AS FINANCIAL SECRETARY.
AS FAR AS HE WAS CONCERNED, HONG KONG IS NO TAX HAVEN.
+WE MAY HAVE A NARROWLY BASED SYSTEM OF DIRECT TAXES WITH LOW RATES OF CHARGE, BUT THAT IS VERY DIFFERENT FROM THE NO-TAX SYSTEM OF REAL TAX HAVENS, HE SAID.
EXPLAINING WHY HE FELT SENSITIVE WHEN HONG KONG IS DESCRIBED AS A TAX HAVEN, SIR PHILIP SAID :+THAT PHRASE HAS SUCH A PEJORATIVE RING TO IT.
THIS PLACE IS NEITHER A HAPPY HUNTING GROUND FOR TAX LAWYERS AND ACCOUNTANTS DEVISING SCHEMES TO SHELTER THEIR CLIENTS' INCOME (AND ASSETS) FROM A HOSTILE FISCAL ADMINISTRATION- NOR IS IT A COCONUT ISLAND FISCAL PARADISE WITH BRASS PLATES CONSPICUOUSLY DISPLAYED.+
THE TOUCHSTONE OF THE LIABILITY TO TAX IN HONG KONG, HE SAID, IS ECONOMIC ACTIVITY HERE (FOR EXAMPLE, EMPLOYMENT OR THE CARRYING ON OF BUSINESS) AND NOT THE TAXPAYER'S PLACE OF RESIDENCE.
+ IN A SITUATION IN WHICH PUBLIC EXPENDITURE HAS INCREASED BY NINE TIMES OVER THE PAST 10 YEARS WITHOUT RECOURSE TO DEBT AND OUR FISCAL RESERVES (NET OF COVER FOR CONTINGENT LIABILITIES) STAND PRESENTLY AT OVER 40 PER CENT OF EXPENDITURE BUDGETED FOR IN 1981-82, WE OBVIOUSLY HAVE A FISCAL SYSTEM AND ONE WHICH IS PRODUCTIVE OF REVENUE.+
REFERRING TO DIRECT TAXES WHICH CONTRIBUTE 45 PER CENT TO RECURRENT REVENUE, SIR PHILIP NOTED, WE HAVE A SCHEDULAR SYSTEM ..... THAT IS TO SAY, WE DO NOT AGGREGATE, EXCEPT WHEN TAXPAYERS OPT FOR THE ADVANTAGES OF PERSONAL ASSESSMENT. SO SALARIES, PROFITS, INTEREST AND INCOME FROM PROPERTY ARE TAXED SEPARATELY.«
+EACH OF OUR FOUR EARNINGS AND PROFITS TAXS IS BASED ON A TERRITORIAL SOURCE, NOT A RESIDENCE, CRITERION, HE SAID.
+WE SEEK TO ENSURE THAT THE TAX SYSTEM IS AS NEUTRAL AS POSSIBLE AS REGARDS ITS EFFECTS ON THE INTERNAL COST/PRICE STRUCTURE, THE SUPPLY OF HUMAN EFFORT AND PRIVATE INVESTMENT DECISIONS.+
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