XN000022-1974-12-19 — Page 3

THURSDAY, DECEMBER 19, 1974.

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+THE TIMING OF THE BILL IS BAD BECAUSE HONG KONG IS IN THE THROES OF AN ECONOMIC RECESSION, WITH BUSINESS PROFITS

THTS GENERALLY LOWER IN 1974/75 THAN THEY WERE IN 1973/74.

IS A CRITICISM THAT HAS BEEN WIDELY VOICED AND APPEARS TO BE RELATED TO THE FIRST MENTIONED CRITICISM THAT BUSINESSES +WILL PAY MORE+.

+THE FACT IS, HOWEVER, THAT IF AS IS GENERALLY ASSERTED, BUSINESS PROFITS ARE DOWN IN 1974/75 COMPARED WITH 1973/74, THEN THE TIMING OF THE BILL FROM THE TAXPAYER'S POINT OF VIEW IS GOOD NOT BAD.

+THIS IS BECAUSE, ALTHOUGH THE BILL PROPOSES A TRANSITIONAL ADJUSTMENT IN THE YEAR OF ASSESSMENT 1974/75 (AN ADDITIONAL ASSESSMENT FOR 1974/75 IF ACTUAL PROFITS FOR THAT YEAR EXCEED THE ACTUAL PROFITS FOR 1973/74) IF THE MAJORITY OF BUSINESSES HAVE MADE SMALLER PROFITS IN 1974/75 THERE WILL BE, IN GENERAL NO ADDITIONAL ASSESSMENT TO BE MADE AND THE TRANSITION FROM THE OLD SYSTEM TO THE NEW WILL HAVE A COMPLETELY NEUTRAL EFFECT.+

MR. LADD SAID THE DISADVANTAGES OF THE PRESENT SYSTEM ARE THAT IT IS COMPLICATED, INEXACT AND CAN OPERATE TO THE DISADVANTAGE OF BOTH THE TAXPAYER AND THE REVENUE. THE ADVANTAGES OF THE PROPOSED NEW SYSTEM ARE THAT IT IS SIMPLE AND EXACT AND THE FINAL TAX PAYABLE IN RESPECT OF A YEAR OF ASSESSMENT. REFLECTS PRECISELY THE PROFITS FOR THAT YEAR OF ASSESSMENT. IN SHORT - THE PRESENT SYSTEM IS A POOR ONE AND THE PROPOSED SYSTEM A DISTINCT IMPROVEMENT.+

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