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Turning to tax avoidance, Sir Hamish announced the Government's intention to remedy by legislation the increasingly widespread use of service companies to avoid or to significantly reduce tax liability.
There are two types of case that are of special concern. The first amounts to an attempt to disguise what is, in substance, an employer-employee relationship.
The second involves the payment of inflated management fees by a firm to a service company that is controlled by the firm's proprietor or its partners.
Following consultations with LegCo members and professionals, the Government had now modified its proposals in a way which would achieve the basic objectives while meeting the concerns raised about the equity and effectiveness of the original approach.
"In brief, I now propose to deal with the first type of case by legislation but to deal with the second type by a Practice Note which will be issued by the Commissioner of Inland Revenue.
"We aim to introduce the legislation into this Council and to issue the Practice Note by the end of this month.
"I hope that this pragmatic compromise will meet with Members' approval," Sir Hamish said.
End/Wednesday, March 1, 1995
Small deficit for 1995-96
The Financial Secretary, the Hon Sir Hamish Macleod, envisaged in the Legislative Council today (Wednesday) a "very small deficit" of $2.6 billion in 1995- 96.
"This is equal to less than 2 per cent of government expenditure. Compared with a surplus of $7.7 billion in 1994-95, it is mildly expansionary," Sir Hamish said.
He said an overall surplus would be returned from 1996-97 onwards. a year earlier than previously forecast.
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