:
WEDNESDAY, JUNE 27, 1990
41
"WITH DIRECT ELECTIONS APPROACHING, THE DEBATE ON THESE ISSUES MAY WELL BECOME RATHER LIVELY,' HE SAID.
"
MR MACLEOD SAID THE APPROPRIATE RATE AT WHICH BUSINESS PROFITS SHOULD BE TAXED WAS ANOTHER DIFFICULT QUESTION TO RESOLVE.
A VERY SMALL ADJUSTMENT TO THE RATE OF PROFITS TAX REAPS SIGNIFICANT RETURNS. ON THE OTHER HAND WE HAVE TO BE CAREFUL TO KEEP THIS SECTOR HEALTHY OR REVENUE WILL ACTUALLY SUFFER IF TAX RATES GO UP TOO MUCH," HE EXPLAINED.
"WE DO NOT WANT TO SEND PROFITABLE BUSINESS INTO THE HANDS OF OUR INCREASINGLY AMBITIOUS REGIONAL COMPETITORS, HE STRESSED.
"THE OTHER FACTOR WE HAVE VERY MUCH IN MIND WHEN CONSIDERING TAX MEASURES IS THE VALUE OF OUR REPUTATION FOR NOT MAKING HASTY OR RADICAL CHANGES; IDEALLY THEN CHANGES SHOULD BE GRADUAL," HE SAID.
COMPETITION WITH OUR NEIGHBOURS WAS A REAL FACTOR AND ONE HAD HAD TO TAKE MORE AND MORE INTO ACCOUNT RECENTLY, HE ADDED.
WE
"I BELIEVE OUR EARLIER INSTINCTS HAVE TURNED OUT RIGHT: STABILITY, SIMPLICITY AND LOW RATES HAVE MADE OUR TAXATION SYSTEM ATTRACTIVE TO OVERSEAS INVESTORS AND THIS STILL REMAINS THE CASE, EVEN THOUGH WE ARE NOW FACING STIFF COMPETITION," HE SAID.
HE
OF
POINTED OUT THAT DESPITE A NUMBER OF TAX HOLIDAYS AND CONCESSIONS BEING OFFERED AROUND THE REGION, HONG KONG'S FORMULA OVERALL SIMPLICITY AND PREDICTABILITY WAS STILL SET TO WIN.
"BUT OF COURSE, TAXATION IS ONLY ONE OF THE FACTORS IN DECIDING WHERE ΤΟ SET UP A REGIONAL CENTRE: WE MUST NOT LET OUR INFRASTRUCTURE AND THE QUALITY AND HONESTY OF OUR PUBLIC SERVICE FALL BEHIND OR THE BALANCE COULD TIP AGAINST US, HE NOTED.
**
AVOIDANCE
REGARDING RECENT DISCUSSION IN THE PRESS ABOUT WHETHER HONG KONG'S TAXATION SYSTEM WAS IN FACT TOO SIMPLE AND THE GOVERNMENT WAS BEING DONE OUT OF SIGNIFICANT AMOUNTS OF REVENUE BY TAX SCHEMES, MR MACLEOD SAID THAT WE MUST BE CAREFUL NOT ΤΟ EMOTIONALLY TO THIS SORT OF PROBLEM.
REACT TOO
WHICH TAX
HE SAID IN ANY SYSTEM THERE WERE CERTAIN AREAS IN CONCESSION OFFERED IN GOOD FAITH TO BENEFIT THE ECONOMY WERE BEING LEGALLY EXPLOITED, ADDING THAT HE WAS REFERRING TO (LEGAL) AND NOT (ILLEGAL) EVASION.
AVOIDANCE
"WHERE WE FEEL THAT SUCH EXPLOITATION IS HARMING THE REVENUE TO AN UNACCEPTABLE EXTENT, WE SHALL TAKE COUNTER-MEASURES," HE POINTED OUT.
HE WENT ON TO GIVE AN ASSURANCE THAT ANY MAJOR DRAINS ON REVENUE FROM AVOIDANCE MEASURE WOULD BE ADDRESSED, AS THEY HAD BEEN IN THE PAST.
HOWEVER, WITH PROFITS TAX REVENUE LAST YEAR AT $22 BILLION, THE PROBLEM HAD NOT GOT TO SERIOUS PROPORTIONS, HE SAID.
/TURNING TO