TUESDAY, JULY 20, 1993
2
"SINCE THE GOVERNOR'S LETTER OF APPOINTMENT CLEARLY STATES THAT REMUNERATION IS TAX FREE, IT WOULD ONLY BE FAIR AND REASONABLE THIS REMAINS TO BE SO UNTIL HIS APPOINTMENT TERMINATES, THE REPORT SAYS.
HIS
THAT
"WE FIRMLY BELIEVE THAT THE LEGAL OBLIGATIONS CONTAINED IN A CONTRACT MUST STAND. THIS BASIC UNDERSTANDING UNDERLIES ALL CONTRACTUAL AGREEMENTS AND THE PRINCIPLE MUST BE UPHELD."
THE PANEL CONSIDERED A COMPARISON OF THE QUEEN'S TAX POSITION IN THE UNITED KINGDOM AND THAT OF THE GOVERNOR. THEY FOUND THAT THE TAX POSITION OF THE GOVERNOR IS VERY DIFFERENT FROM THAT OF THE QUEEN AND CONCLUDED THAT IT IS NOT MEANINGFUL TO DRAW ANALOGY BETWEEN THE TWO.
"WHILE THE QUEEN WAS NOT LIABLE TO PAY ANY INCOME, CAPITAL GAINS OR INHERITANCE TAX IN THE PAST, THE GOVERNOR HAS ALWAYS BEEN SUBJECT TO ALL FORMS OF TAXATION EXCEPT FOR EXCISE DUTY AND SALARIES TAX ON HIS OFFICIAL EMOLUMENTS AD GOVERNOR OF HONG KONG.'
"
"THE ELEMENT THAT THE GOVERNOR'S SALARY WILL BE TAX FREE IS CLEARLY SET OUT IN HIS LETTER OF APPOINTMENT. SUCH A CONTRACTUAL CONDITION IS ABSENT IN THE CASE OF THE QUEEN.
+
THE PANEL HAS ALSO CONSIDERED THE SUGGESTION THAT THE GOVERNOR SHOULD NONETHELESS PAY SALARIES TAX WITHOUT ANY COMPENSATION AND HAS CONCLUDED:
WE
"THIS WOULD MEAN A REDUCTION IN HIS REMUNERATION PACKAGE. NOT CONSIDER THIS SUGGESTION FAIR GIVEN THAT THE GOVERNOR HAS ACCEPTED HIS APPOINTMENT ON THE TERMS OFFERED TO HIM,"
DO
NOR DOES THE PANEL SUPPORT THE SUGGESTION THAT THE GOVERNOR SHOULD PAY SALARIES TAX BUT BE COMPENSATED BY A PAY RISE то RESTORE HIS NET INCOME:
"THIS WOULD BE AN ARTIFICIAL MEANS TO ACHIEVE THE SAME REMUNERATION PACKAGE WHICH WOULD NOT IN EFFECT RESULT IN ANY MATERIAL DIFFERENCE.
"HAVING REGARD ΤΟ THE GOVERNOR'S STATUTORY EXEMPTION FROM PAYMENT OF SALARIES TAX, THE LEGALITY OF HIS LETTER OF APPOINTMENT, AND THE DIFFERENCES BETWEEN THE TAX POSITIONS OF THE GOVERNOR AND THE QUEEN,
WE BELIEVE THAT THE ONLY LOGICAL SOLUTION IS TO MAINTAIN THE STATUS QUO," THE REPORT SAYS.
IN
THE INDEPENDENT PANEL WAS APPOINTED BY THE CHIEF SECRETARY MAY TO ADVISE ON WHETHER THE GOVERNOR SHOULD BE LIABLE TO PAY SALARIES TAX IN HONG KONG.
THE PANEL COMPRISED: SIR SIDNEY GORDON, SIR Q W LEE AND MR ANDREW SO. ALL HAVE HAD DIRECT EXPERIENCE OF DEALING WITH THE TERMS AND CONDITIONS OF SERVICE IN THE PUBLIC SECTOR.
ON THE ADVICE OF THE EXECUTIVE COUNCIL, THE ADMINISTRATION ACCEPTED THE PANEL'S RECOMMENDATION.
HAS
THE GOVERNOR HAS TAKEN NO PART IN THE REVIEW AND WAS NOT PRESENT DURING EXCO'S CONSIDERATION OF THE PANEL'S RECOMMENDATIONS.
13