XN000022-1977-05-11 — Page 2

WEDNESDAY, MAY 11, 1977

HONG KONG'S PERSONAL TAXATION SYSTEM

******

HIGH TAX THRESHOLDS AND LOW EFFECTIVE TAX RATES HAVE MADE HONG KONG'S PERSONAL TAXATION ONE OF THE LOWEST IN THE WORLD.

THIS WAS POINTED OUT TODAY BY A SPOKESMAN FOR THE INLAND REVENUE DEPARTMENT WHEN HE COMMENTED ON HONG KONG'S PERSONAL TAXATION SYSTEM.

HE RECALLED THAT THE FINANCIAL SECRETARY IN HIS BUDGET SPEECH HAD PROPOSED INCREASES IN CHILD ALLOWANCES AND THE INTRODUCTION OF A NEW SUPPLEMENTARY PERSONAL ALLOWANCE OF $2,500 FOR A SINGLE PERSON AND $5,000 FOR A MARRIED PERSON, SUBJECT TO A CLAW-BACK PROVISION OF 20 PER CENT, SUBSEQUENTLY, DURING THE RESUMED BUDGET DEBATE, THE FINANCIAL SECRETARY HAD REDUCED THE CLAW-BACK TO 15 PER CENT TO FURTHER BENEFIT TAXPAYERS, PARTICULARLY THE LOWER AND MIDDLE INCOME GROUPS.

THE SPOKESMAN SAID, QUITE APART FROM THE PROPOSED SUPPLEMENT- ARY PERSONAL ALLOWANCES, THE BASIC ALLOWANCES OF $10,000 FOR SINGLE TAXPAYERS AND $20,000 FOR MARRIED TAXPAYERS ARE STILL THE HIGHEST TAX THRESHOLDS WHEN COMPARED, FOR EXAMPLE, WITH THOSE IN SINGAPORE, MALAYSIA, AND THE UNITED KINGDOM.

→IN SINGAPORE, THE PERSONAL TAX THRESHOLDS, CONVERTED TO HONG KONG DOLLARS, ARE $5,750 FOR A SINGLE AND $7,650 FOR A MARRIED PERSON WHILE THOSE IN MALAYSIA ARE $4,220 AND $6,330- AND IN THE UNITED KINGDOM, $6,350 AND $16,100.

+AS POINTED OUT BY THE FINANCIAL SECRETARY IN HIS SPEECH WINDING UP THE 1977/78 BUDGET DEBATE IN THE LEGISLATIVE COUNCIL LAST MONTH, THE TAX SYSTEM IN ALL THESE COUNTRIES IS NOT ONLY SHARPLY PROGRESSIVE, BUT REACHES VERY HIGH EFFECTIVE RATES.

+BY CONTRAST, IN HONG KONG THE RATES APPLICABLE TO OUR SCHEDULAR SYSTEM RISE FROM FIVE PER CENT ON THE FIRST PLATFORM OF $10,000 OF NET CHARGEABLE INCOME TO 30 PER CENT ABOVE THE FIFTH PLATFORM OF $10,000 AND THE OVERALL EFFECTIVE RATE IS LIMITED TO ONLY 15 PER CENT OF GROSS INCOME.

+THUS, THE EFFECTIVE RATE OF TAX FOR A MARRIED TAXPAYER WITHOUT CHILDREN WILL BE ZERO PER CENT AT INCOMES OF $25,000 AND BELOW, INCREASING TO ONLY 2.13 PER CENT AT $36,000- TO 5.14 PER CENT AT $48,000 TO 8.33 PER CENT AT $60,000, THE MAXIMUM RATE OF 15 PER CENT NOT BEING REACHED UNTIL $90,000.+

/+CRITICS OF