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THURSDAY, MARCH 27, 1986
TIME FOR ANOTHER TAXATION POLICY REVIEW
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THE TIME HAS COME FOR A FOURTH REVIEW OF THE TAXATION POLICY WITH THE AIM OF FORMULATING A LONG-TERM POLICY COVERING THE ENTIRE TRANSITION PERIOD UP TO 1997 AND BEYOND.
THIS SUGGESTION WAS MADE BY THE HON LEE YU-TAI TODAY (THURSDAY) IN THE LEGISLATIVE COUNCIL DURING THE BUDGET DEBATE.
HE SAID IT DID NOT WORRY HIM THAT INDIRECT TAX WAS CHARGED INDISCRIMINATELY ON THE WEALTHY AND THE LESS WELL-OFF, WITHOUT PERFORMING THE FUNCTION OF RE-DISTRIBUTION OF WEALTH.
+ IF IT IS LEGITIMATE WEALTH EARNED THROUGH SOUND DECISIONS AND DILIGENCE, THE EARNER SHOULD NOT BE PENALISED BY HEAVY TAXATION, THIS IS THE BASIC PHILOSOPHY OF A FREE ENTERPRISE SOCIETY, IN WHICH FORM HONG KONG SHALL REMAIN AFTER 1997, + HE SAID.
IN CASES OF EASY MONEY BEING GAINED BY A LUCKY FEW, HE ARGUED THAT EARNERS WOULD VERY LIKELY INDULGE IN CARE-FREE SPENDING AND END UP CONTRIBUTING GREAT AMOUNTS TO THE GOVERNMENT REVENUE THROUGH INDIRECT TAX.
HE SAID HE AGREED THAT PROGRESS MADE TOWARDS BALANCING THE PROPORTION OF DIRECT AND INDIRECT TAXES DESERVED SUPPORT BUT FELT THAT THE CHOICE OF ITEMS SUBJECT TO INDIRECT TAXATION SEEMED TO BE DETERMINED BY REVENUE CONSIDERATIONS ONLY TO THE EXTENT THAT SOME SECTORS MIGHT FEEL VICTIMISED.
CITING SOFT DRINKS, MOTOR CARS AND TOBACCO PRODUCTS AS EXAMPLES, HE RECOMMENDED THAT THE POLICY OF INDIRECT TAX BE REVIEWED SO AS TO ACHIEVE A FAIR DISTRIBUTION ACROSS INDUSTRIES AND PRODUCT ITEMS.
MR LEE THEN PROPOSED THAT THE EXISTING ANOMALY OF DOUBLE TAXATION WHEREBY A BUSINESS TRANSACTION WAS TAXED BOTH IN CHINA AND IN HONG KONG, SHOULD BE RECTIFIED AT THE EARLIEST OPPORTUNITY AS AN ENCOURAGEMENT IN THE DEVELOPMENT OF CHINA TRADE.
+THE AMOUNT OF TAX PAYABLE TO CHINA SHOULD, AT LEAST, BE REGARDED AS AN EXPENSE ITEM, WHICH WILL BE DEDUCTED FROM GROSS PROFIT FOR THE PURPOSE OF TAX ASSESSMENT IN HONG KONG. +
HE ALSO SUGGESTED THAT THE INCOMING FINANCIAL SECRETARY SHOULD RESOLVE THE IMPORTANT ISSUE OF SEPARATE TAX ASSESSMENT OF MARRIED COUPLES IN VIEW OF CHANGED SOCIAL CIRCUMSTANCES.
TURTHERMORE, MR