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WEDNESDAY, MARCH 3, 1993
A SIMILAR HOUSEHOLD EARNING THE MEDIAN INCOME OF $11,500 A MONTH WILL CEASE TO PAY ANY SALARIES TAX AT ALL.
MR MACLEOD SAID IN RESPONSE TO THE VIEWS EXPRESSED BY MANY MEMBERS, THE STANDARD RATE OF 15% WOULD REMAIN THE MAXIMUM PROPORTION OF MONTHLY EARNINGS WHICH ANY EMPLOYEE WOULD PAY IN SALARIES TAX.
INTRODUCING HIS REVENUE PROPOSALS, MR MACLEOD SAID HIS MAIN AIM HAD BEEN TO MAINTAIN FISCAL PRUDENCE WHILE, AT THE SAME TIME, REDUCING THE TAX BURDEN AS FAR AS POSSIBLE FOR THE LARGEST NUMBER OF TAX-PAYING HOUSEHOLDS. HE HAD FACED THREE CHALLENGES:
HE
"BECAUSE TAX CONCESSIONS ARE RECURRENT IN NATURE, EVEN A MODEST CUT IN OUR PRINCIPAL TAXES CAN HAVE A MAJOR IMPACT ON OUR CURRENT REVENUE FLOWS AND FUTURE RESERVES. WE CANNOT GO TOO FAR WITHOUT JEOPARDISING THE PRUDENT LEVEL OF RESERVES WHICH WE BELIEVE TO BE NECESSARY.
"WE NEED TO AVOID MEASURES WHICH WOULD ADD SIGNIFICANTLY TO INFLATION.
"WE NEED TO AVOID ANY STEPS THAT WOULD COMPLICATE OUR SIMPLE TAX SYSTEM. AND WE MUST PROGRESSIVELY CLOSE LOOPHOLES FOR ESCAPING THE TAX PROPERLY PAYABLE."
ADDED: "SETTING PRIORITIES MEANS MAKING CHOICES. AND IN MY PROPOSALS I HAVE RELIED ON THE ADVICE I HAVE RECEIVED FROM MEMBERS DURING TWO ROUNDS OF DETAILED CONSULTATIONS WITH THEM. I FOUND THESE DISCUSSIONS EXTREMELY USEFUL.
I
HE NOTED THAT LAST YEAR THERE HAD BEEN A SPIRITED DEBATE ABOUT SALARIES TAX.
AT THE HEART OF THE CONTROVERSY WAS THE QUESTION: AT WHAT LEVEL SHOULD TAX ALLOWANCES AND TAX BANDS BE SET. IN PARTICULAR, MEMBERS HAD EXPRESSED CONCERN OVER WHETHER LEVELS OF TAX ALLOWANCES HAD KEPT UP WITH THE RATE OF INFLATION OVER THE PAST FEW YEARS.
"IT IS IMPORTANT TO REMEMBER THAT NOT ONLY HAVE TAX ALLOWANCES BERN INCREASED FAIRLY REGULARLY BUT ALSO THAT TAX BANDS AND THE MARGINAL RATES HAVE BEEN ADJUSTED ON SEVERAL OCCASIONS. THE COMBINED EFFECT OF THESE CONCESSIONS ON SALARIES TAX PAYERS HAS BEEN THAN KEEP PACE WITH INFLATION.
TO MORE
"FOR THIS YEAR, MY STARTING POINT MUST BE THE UNDERTAKING I GAVE TO THIS COUNCIL WHEN CONCLUDING THE 1992 BUDGET DEBATE. I SAID THEN THAT, SUBJECT TO ECONOMIC AND FISCAL CONSTRAINTS, I PLANNED TO INCREASE SALARIES TAX ALLOWANCES SUBSTANTIALLY, AS WELL AS TO REVIEW TAX BANDS. I ADDED THAT THESE IMPROVEMENTS WOULD SUBSTANTIALLY LESSEN THE TAX LIABILITY OF THE 'SANDWICH CLASS.
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"IN THE CONSULTATION EXERCISE, IT BECAME CLEAR THAT MEMBERS ATTACHED PARTICULAR IMPORTANCE TO INCREASES IN TAX ALLOWANCES, AND I HAVE TAKEN THIS INTO ACCOUNT IN SHAPING MY PROPOSALS."
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