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HONG KONG LEGISLATIVE COUNCIL.
put forward mainly with a view to increasing the revenue but for purposes connected with foreign exchange policy which I will explain more fully in a few minutes. The additional taxes are designed deliberately to check consumption and cannot be expected to produce a proportional amount of revenue.
The revenue will also benefit a little by steps which have been taken or are in contemplation to implement certain minor recommenda- tions of the Taxation Committee. School fees are being increased as from the 1st January, fees for maintenance in hospitals are being revised, especially for Government servants; and discussions are in train with the object of securing the payment of royalties by certain public utility companies as recommended by the Committee. In all the additional revenue, mainly of course from the petrol and liquor duties, should be not less than $1,000,000 per annum.
The revised ordinary budget should therefore show a nominal surplus of some $2,000,000, but since it is not proposed to make any specific amendments to allow for declines in other items of revenue and increases in costs of supplies, etc. that nominal surplus will be rather a reserve than a true expectation of excess of revenue.
I promised a few minutes ago to give some further details of the Income Tax proposals; but the figures I shall quote must be taken as provisional only. Although Government is convinced of the necessity of such a measure in principle there is no intention to thrust upon the Council a scheme cut and dried in all its details and all the personal and other allowances will be open to full discussion in this Council or in any special committee which may be set up to consider the details. Honourable members and the public will, however, wish to have some idea of what is in Government's mind on those points.
The standard rate of 10% will be charged on all company profits, payments of interest, etc., and on all income in respect of which the recipient has made no claim to personal and family allowances; but the man who makes such a claim will pay at 10% only on the balance of his income after deducting his allowances and after paying at half rate, 5%, on the first part of his taxable income.
The allowances Government has provisionally in mind are earned income allowance, one-tenth of earned income up to $15,000; personal allowance, $1,800 for a single man plus $1,350 for a wife; children, $1,000 for the first child and $600 for each subsequent child. The 5% rate would be charged on the first $3,000 after deducting allow-
ances.
Under this scheme, the exemption limit would be $1,800 per annum for unearned income and $2,000 for earned income; and a married man with two children would be exempt up to $5,280 per annum and would only pay the full rate of 10% on income in excess of $8,600 per annum. The following are random examples of the
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