XN000022-1978-04-13 — Page 2

THURSDAY, APRIL 13, 1978

PROPOSAL TO RE INTRODUCE DEPENDENT PARENT'S ALLOWANCE IN 1979-80

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THE FINANCIAL SECRETARY, THE HON. PHILIP HADDON-CAVE, TODAY PROPOSED TO RE INTRODUCE THE DEPENDENT PARENT'S ALLOWANCE IN 1979-80 BUT REJECTED SUGGESTIONS TO FURTHER INCREASE THE PERSONAL ALLOWANCES OR TO INTRODUCE A WORKING WIFE'S ALLOWANCE.

WINDING UP THE BUDGET DEBATE IN THE LEGISLATIVE COUNCIL TODAY, MR. HADDON-CAVE SAID SUBJECT TO THE ADVICE OF THE GOVERNOR- IN-COUNCIL, HE WOULD INTRODUCE AN AMENDING BILL IN THE COUNCIL LATER THIS YEAR WHICH WOULD CONTAIN PROPOSALS FOR A DEPENDENT PARENT'S ALLOWANCE FROM THE YEAR OF ASSESSMENT 1979-80.

+ I HOPE HONOURABLE MEMBERS WILL READILY APPRECIATE THAT 1979-80 IS THE EARLIEST POSSIBLE YEAR OF IMPLEMENTATION. THERE CAN BE NO QUESTION OF OUR BEING ABLE TO WORK OUT A SCHEME INTRODUCE LEGISLATION AND MOUNT ALL THE NECESSARY ADMINISTRATIVE ARRANGEMENTS IN TIME TO GRANT THE ALLOWANCE FOR THE CURRENT YEAR OF ASSESSMENT, HE SAID.

MR. HADDON-CAVE NOTED THAT WHILE NO ONE HAS DENIED HIS POINT THAT, IN GENERAL CONTEXT OF OUR SYSTEM OF PERSONAL TAXATION, THE ALLOWANCE IS OF LIMITED SIGNIFICANCE FOR THE TAXPAYER WITH DEPENDENT PARENTS, THE PRESSURE FOR THE ALLOWANCE TO BE RE INTRODUCED IN SOME FORM APPARENTLY REMAINS.

+THE QUESTION IS WHY? I CAN ONLY PRESUME THAT IT IS THE CONCEPT OF AN ALLOWANCE FOR DEPENDENT PARENTS WHICH IS OF IMPORTANCE: THAT IS TO SAY, THE VIEW IS WIDELY HELD THAT IT IS WRONG FOR THE GOVERNMENT, VIA THE SYSTEM OF PERSONAL TAXATION, NOT TO RECOGNISE FILIAL DUTY.+

ON PERSONAL ALLOWANCES IN SALARIES TAX, MR. HADDON-CAVE SAID THE ALLOWANCE WHICH WAS REVIEWED ONLY LAST YEAR ARE GENEROUS ENOUGH TO KEEP A VERY LARGE PERCENTAGE OF THE SALARIED POPULATION COMPLETELY OUTSIDE THE DIRECT TAX NET.

HE SAID: +1 MUST ALSO REJECT THE VIEW THAT, WHEN I INCREASED THE TAX THRESHOLD TO $12,500 AND $25,000 FOR SINGLE AND MARRIED PERSONS RESPECTIVELY. I WAS OF THE OPINION THAT THESE WERE MINIMUM SUBSISTENCE COSTS.+

+NOT TO REJECT THIS VIEW WOULD BE TO IMPLY THAT A LARGE NUMBER OF PEOPLE IN HONG KONG ARE LIVING BELOW SUBSISTENCE LEVEL. +

HE ALSO POINTED OUT THAT OUR EFFECTIVE RATES OF TAX THE AMOUNT OF TAX EXPRESSED AS A PERCENTAGE OF A PERSON'S INCOME, IN THE IR PROGRESSION TO THE STANDARD RATE OF 15 PER CENT OF GROSS INCOME - ARE EXTREMELY LOM.

/HE GAVE THE