XN000022-1976-03-25 — Page 7

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THURSDAY, MARCH 25, 1976

WARNING AGAINST IMPORTING COMPLICATED

TAXATION SYSTEM ****

THE HON. JOHN BREMRIDGE, WHILE WELCOMING THE INLAND REVENUE REVIEW COMMITTEE, TODAY GAVE A WARNING AGAINST IMPORTING THE WHOLE BAG OF COMPLICATED TAXATION MEASURES WHICH PLAGUE OTHER COUNTRIES+.

HE SAID HONG KONG'S PRESENT TAX SYSTEM +AT LEAST WORKS AND IS EASILY COMPREHENSIBLE.+

SPEAKING AT THE RESUMED BUDGET DEBATE IN THE LEGISLATIVE COUNCIL, HE SAID +WE SHOULD NOT THROW OUT THE BABY WITH THE BATH WATER. THE RICH CAN ALWAYS PAY FOR TECHNICAL ADVICE AND LEGAL DEFENCE. THE POOR CANNOT.-

MR. BREMRIDGE AGREED THAT SOME INDIVIDUALS, INTERESTS, AND COMPANIES RESIDENT IN HONG KONG CONTRIBUTED NOTHING TO THE COMMUNITY IN THE FORM OF TAXATION.

IF TAXES COULD BE LEVIED ON THEM, THEN TO THAT EXTENT THE BURDEN OF TAXATION ON THE REST OF US COULD BE REDUCED AND EQUITY WOULD UNDOUBTEDLY BE SERVED.

ON THE OTHER HAND, MR. BREMRIDGE SAID, IT WAS GENERALLY AND WISELY ACCEPTED THAT HONG KONG MUST REMAIN A LOW-TAX AREA- THAT TAXATION MUST BE SIMPLE AND CHEAP TO COLLECT THAT ECONOMIC GROWTH MUST NOT BE IMPEDED AND THAT USEFUL OVERSEAS INVESTMENT MUST NOT BE DISCOURAGED.

REFERRING TO THE PROPOSED DIVIDEND WITHHOLDING TAX, MR. BREMRIDGE SAID ITS IMPLEMENTATION SEEMED CERTAIN TO INVOLVE THE INTRODUCTION OF AN UNDISTRIBUTED PROFITS TAX, RESTRICTIONS ON DIRECTORS' FEES, NEW RULES ON COMPANIES RESIDENCE, APPRECIABLE DIS INCENTIVES TO OVERSEAS INVESTMENT AND MUCH MORE.

+ IT THEREFORE APPEARS THAT ACCOMPANYING LEGISLATION WOULD BE BOTH CONTENTIOUS AND COMPLICATED, HE SAID. +NOR WILL THE LEGAL POSITION NECESSARILY BE KNOWN UNTIL PRECEDENTS HAVE BEEN ESTABLISHED IN THE COURTS.+

HE SAID IT WAS RIGHT TO BE CAUTIOUS IN VIEW OF +WHAT HAS HAPPENED IN OTHER LESS FORTUNATE PLACES WHERE PROGRESSIVE REFORM HAS LED TO FEARFUL AND TOTALLY UNEXPECTED PROBLEMS.+

HE ADDED : +TAXATION'S PURPOSE IN HONG KONG IS TO RAISE REVENUE SIMPLY AND CHEAPLY. NOTHING ELSE.

REFERRING TO THE WORK OF THE SECURITIES COMMISSION, MR. BREMRIDGE SUGGESTED THAT SOME ACCOUNTANTS' FACILE REPORTS ACCOMPANYING NEW ISSUES +SHOULD BE EYED VERY MUCH MORE COLDLY THAT THEY WERE IN THE LAST STOCK EXCHANGE BOOM.+

/+THE LINE