XN000022-1973-11-28 — Page 27

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Wednesday, November 28, 1973

TAX EXEMPT RÅTE ON INTEREST RAISED TO FOUR PER CENT

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The Legislative Council today approved a resolution to further

increase the tax exemption rate of interest from three-and-a-half per

cent to four per cent.

In moving the motion, the Financial Secretary, the Hon. C.P.

Haddon-Cave, noted that the tax exempt rate was last changed in 1968

when it was raised to three-and-a-half per cent from three per cent.

"Because of the general rise in interest rates there is a

good case for a further concession, given the practical link between

the exempt rate and that paid on saving accounts," he said.

He pointed out that there were two increases in the banks'

interest rates during August, and it was felt that small savers should

receive some benefit from the higher rates without too much delay.

"The banks all raised their interest on accounts to four per

cent on September 1 and it is logical that this rate should be allowed

to continue until further notice," he added.

The Financial Secretary explained that under the provisó to

Section 28 of the Inland Revenue Ordinance, no tax was charged on any

interest paid, or payable, by the government or a bank which accrued at

a rate not exceeding three-and-a-half per cent.

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