XN000022-1982-02-24 — Page 6

WEDNESDAY, FEBRUARY 24, 1982

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RELIEF IN ESTATE DUTY

***

THE FINANCIAL SECRETARY, THE HON JOHN BREMRIDGE, AMONG HIS PACKAGE OF TAX CUTS IN HIS FIRST BUDGET SPEECH, HAS PROPOSED THREE CONCESSIONS IN THE ESTATE DUTY WHICH HE SAYS IS IN LINE WITH HONG KONG'S LOW TAX PHILOSOPHY.

THE CONCESSIONS ARE:

*

THE EXEMPTION LIMIT ON ESTATE DUTY WILL BE INCREASED FROM $1 MILLION TO $2 MILLION-

* NEW RATES FOR ESTATE DUTY FROM 10 PER CENT FOR $2 MILLION,

RISING BY TWO PERCENTAGE POINTS FOR EVERY EXTRA $500 000 TO THE MAXIMUM RATE OF 18 PER CENT FOR $4 MILLION AND ABOVE- AND

* EXEMPTION FROM DUTY ALTOGETHER THE PRINCIPAL MATRIMON JAL HOME OF THE DECEASED WHO HAS LEFT A SURVIVING SPOUSE.

ON THE FIRST CONCESSION, MR BREMRIDGE SAID THE INCREASE MIGHT AT FIRST SIGHT SEEM SOMEWHAT GENEROUS, BUT IT RECOGNISED THAT ASSET VALUES HAD CONTINUED TO RISE AND WAS CONSISTENT WITH OUR LOW TAX PHILOSOPHY.

THE NEW RATES FOR THE ESTATE DUTY WERE TO KEEP THE CONCEPT OF GRADUALITY IN TAXATION WHILE THE LAST RELIEF ACKNOWLEDGED THE CLAIM THAT SOMETIMES THERE COULD BE HARDSHIP FOR THE SURVIVING SPOUSE BECAUSE THE HOME WAS SUBJECT TO DUTY. +WHILE I KNOW OF NO CASE WHERE A WIDOW HAS BEEN OBLIGED TO SELL THE HOME IN ORDER TO PAY THE DUTY, IT SEEMS LOGICAL IN THE CONTEXT OF OUR LOW TAX PHILOSOPHY TO EXCLUDE IT FROM CHARGE.+

THE COST TO THE REVENUE OF THESE THREE CONCESSIONS WILL BE ABOUT $42 MILLION IN 1982-83 AND $52 MILLION IN THE FOLLOWING YEAR,

8 PER CENT GROWTH IN GDP TIPPED ***

HONG KONG'S GROSS DOMESTIC PRODUCT WILL GROW BY EIGHT PER CENT IN REAL TERMS IN 1982, MADE UP OF GROWTH RATES OF SEVEN PER CENT FOR BOTH PRIVATE AND GOVERNMENT CONSUMPTION EXPENDITURE AND OF 16 PER CENT FOR GROSS DOMESTIC FIXED CAPITAL FORMATION.

THE FORECAST WAS MADE BY THE FINANCIAL SECRETARY, THE HON JOHN BREMRIDGE IN HIS BUDGET PRESENTED TO THE LEGISLATIVE COUNCIL TODAY.

MR BREMRIDGE SAID ALTHOUGH THE FORECAST GROWTH RATE IN REAL TERMS FOR THE GDP IS LOWER THAN OUR ACTUAL ACHIEVEMENT IN RECENT YEARS. IT IMPLIES A GREATER INCREASE IN THE GROWTH RATE OF OUTPUT PER PERSON EMPLOYED THAN LAST YEAR.

/+THIS IS THE