XN000022-1978-03-01 — Page 3

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WEDNESDAY, MARCH 1, 1978

THE RATE OF TAX ON EASIC CARS REMAINS UNCHANGED AT 30 PER CENT. THE RATES FOR THE SEMI-LUXURY AND LUXURY CARS HAVE EEEN INCREASED TO 35 PER CENT AND 40 PER CENT RESPECTIVELY.

THE NEW RATES, WHICH COME INTO EFFECT TOMORROW (MARCH 2), ..ILL RAISE AN ADDITIONAL REVENUE OF ABOUT $15 MILLION IN 1978-79.

SALES OF BASIC CARS REPRESENT ABOUT THREE-QUARTERS OF TOTAL SALES IN HONG KONG AND FOR THOSE IN THE SEMI-LUXURY AND LUXURY CATEGORIES THE MAXIMUM EFFECT OF THE PROPOSALS ..ILL BE TO INCREASE RETAIL PRICES BY BETWEEN 2 PER CENT AND 6 PER CENT RESPECTIVELY.

THE FIFTH PROPOSAL IS A REVENUE CONCESSION. THE FINANCIAL SECRETARY PROPOSES TO ABOLISH STAMP DUTY ON A LARGE VARIETY OF TRANSACTIONS, EXCEPT ON CONTRACT NOTES IN RESPECT OF SHARES AND MARKETABLE SECURITIES, ASSIGNMENTS OF IMMOVABLE PROPERTY AND LEASES AND ASSIGNMENTS OF LEASES.

THE ESTIMATED LOSS TO GOVERNMENT REVENUE FROM THIS PROPOSAL IN 1978-79 IS $130 MILLION.

THE SIXTH PROPOSAL IS TO REDUCE STAMP DUTY ON CONTRACT NOTES SO AS TO REMOVE AN ALLEGED DISINCENTIVE TO TRADE IN MARKETABLE SECURITIES.

FROM NEXT MONDAY (MARCH 6), TRANSACTIONS IN THE STOCK MARKET WILL ATTRACT STAMP DUTY AT THE RATE OF $6 PER MILLE (COMPARED WITH 38 PER MILLE AT PRESENT). THE COST TO REVENUE IS ESTIMATED TO BE $25 MILLION.

THE COST OF THE TWO REVENUE CONCESSIONS IS ESTIMATED AT $155 MILLION. THE INCREASE IN REVENUE ARRIVING FROM THE FIVE OTHER REVENUE PROPOSALS IS $35 MILLION. THUS, THE GOVERNMENT

IS EFFECTIVELY FOREGOING REVENUE OF $120 MILLION.

AS A RESULT OF THESE PROPOSALS THE ESTIMATED OUTTURN FOR 1978-79 IS A SMALL DEFICIT OF $20 MILLION MADE UP AS FOLLOWS:

$MILLION

ESTIMATED REVENUE

10,366

ESTIMATED EXPENDITURE

10,266

DIFFERENCE

100

COST OF REVENUE PROPOSALS

120

ESTIMATED OUTTURN

20.

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