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Inland Revenue (Amendment) Bill 1995
Following is the speech by the Secretary for Transport, Mr Haider Barma, in moving the second reading of the Inland Revenue (Amendment) (No 4) Bill 1995 in the Legislative Council today (Wednesday):
Mr President,
I move the Second Reading of the Inland Revenue (Amendment) (No 4) Bill 1995. This Bill seeks to remove tax concessions for company-owned cars.
The Administration's assessment remains that at least 25 per cent of private cars are now company owned and that such cars account for about 40 per cent of the cars on the roads during peak commuting hours. At present, cars in company ownership benefit from generous initial and annual depreciation allowances. An initial allowance of 60% and an annual allowance of 30% of the residual value of motor vehicles can be claimed under the Inland Revenue Ordinance. This in effect means that companies can claim tax allowances of up to 72% of the capital cost of their cars in the first year. Such concessions provide a positive incentive for companies to own private cars.
During the public consultation exercise on traffic congestion there was strong support for the removal of tax benefits for the purchase and operation of company cars. The Inland Revenue (Amendment) (No. 4) Bill 1995 secks to remove these concessions.
Clause 3 of the Bill provides that in calculating a person's assessable income, no outgoings or expenses incurred in connection with the acquisition, financing, leasing, maintenance, operation or use of a private car shall be deducted.
Clause 4 provides that in the calculation of taxable profits, no outgoings or expenses incurred in connection with the acquisition, financing, leasing, maintenance. operation or use of a private car shall be deducted. However, the clause provides for an exception for car dealers, who will continue to be entitled to such deductions in respect of their trading stock.
Thank you, Mr President.
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