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There will be a number of measures to safeguard against abuse of the scheme which will only apply to private vehicles.
Commercial vehicles seldom have an economic life exceeding 10 years, and, in any case, they pay a much lower First Registration Tax.
Mr Tsang said the Government would review the effect of the proposed scheme after 12 months.
The Financial Secretary also said it had become apparent that some motor vehicle dealers had been manipulating their First Registration Tax liability,.
They artificially suppressed the retail price of the standard motor vehicle and over-declared the value of tax exempted items like vehicle accessories and distributor's warranties, he said.
"I intend to stop this abuse and ensure that all vehicle dealers can operate on a level playing field," Mr Tsang stressed.
He will introduce an amendment Bill into the Legislative Council within this legislative session to set a reasonable ceiling value for these tax exempted items. The excess of the value of these items over the ceiling value will be subject to First Registration Tax.
End
Refurbishment allowance for hotels set
The Government proposes to introduce a specific allowance to enable hotels to deduct refurbishment expenditure over a five year period using an annual 20 per cent write-off.
The Financial Secretary, Mr Donald Tsang, said the cost of this proposal was estimated to be $2 million in 1996-97 and $100 million up to 1999-2000.
At present. such refurbishment expenditure is subject to a commercial rebuilding allowance of just two per cent, meaning that it can only be written-off over 50 years.
"I recognise that, for a hotel, refurbishments have only a limited life before the hotel has to be renovated again to maintain quality and standards," Mr Tsang said.
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