XN000022-1984-02-29 — Page 40

WEDNESDAY, FEBRUARY 29, 1984

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+AS FOR DIRECT TAXATION, IT IS NECESSARY NOW TO INCREASE THE STANDARD RATE FOR PROFITS SALARIES, PROPERTY AND INTEREST INCOME BY TWO PERCENTAGE POINTS. FOR SALARIES TAX PAYERS A 17 PER CENT MAXIMUM RATE WILL AFFECT ONLY THE MORE COMFORTABLY OFF. THE INCREASE FROM 16-1/2 PER CENT TO 18-1/2 PER CENT ON CORPORATION PROFITS TAX, WHILE PAINFUL, CAN I BELIEVE BE BORNE. MOST PROFITS SHOULD RISE MORE. IF THESE INCREASES WERE NOT IMPOSED THIS YEAR THERE WOULD HAVE TO BE HIGHER INCREASES NEXT YEAR.

+I AM ALSO PROPOSING TWO NEW MEASURES CONCERNING BUSINESSES OPERATING IN HONG KONG. FIRST, TO PROTECT THE YIELD FROM PROFITS TAX FOLLOWING THE REMOVAL OF INTEREST TAX ON DEPOSITS; AND SECOND TO BRING WITHIN THE PROF ITS TAX NET ALL INTEREST FROM DEPOSITS, INCLUDING SO-CALLED OFFSHORE DEPOSITS, WHERE SUCH INTEREST IN REALITY ARISES FROM THE BUSINESS OPERATIONS HERE.

+AS A RESULT THE FORECAST DEFICIT FOR 1984-85 SHOULD DROP TO A TOLERABLE $2.1 BILLION.

+SUBJECT TO NO UNFORESEEN SHOCKS, IN 1984 I BELIEVE THAT GDP WILL INCREASE BY RATHER OVER 6 PER CENT, THAT INFLATION WILL DROP TV 7 PER CENT BY THE END OF THE YEAR, THUS REDUCING THE YEAR ON YEAR AVERAGE TO ABOUT 9 PER CENT; THAT CAPITAL INVESTMENT WILL GROW AGAIN THAT REAL WAGES WILL BEGIN TO RISE WITH STABILISED EMPLOYMENT; AND THAT THE HONG KONG DOLLAR WILL REMAIN STRONG.

GOOD NIGHT.+

BUDGET BRIEFING * *

THE FINANCIAL SECRETARY, SIR JOHN BREMRIDGE, WILL GIVE A PRESS BRIEFING ON THE BUDGET AT 4.30 PM, TOMORROW (THURSDAY), AT THE GIS THEATRE.

NOTE TO EDITORS:

TRADE MINISTER ARRIVING

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THE MINISTER FOR TRADE, MR PAUL CHANNON, WILL ARRIVE

IN HONG KONG TOMORROW (THURSDAY) FOR A THREE-DAY VISIT.

MR CHANNON IS DUE TO ARRIVE ON FLIGHT CA 501, ETA 10.40 AM.

A FACILITY HAS BEEN ARRANGED FOR PHOTOGRAPHERS AND CAMERAMEN TO COVER HIS ARRIVAL. PLEASE ADVISE THOSE COVERING THE EVENT TO ASSEMBLE AT THE AIRPORT PRESS CONFERENCE ROOM NOT LATER THAN 9.40 AM.

GIS OFFICERS WILL BE ON HAND TO ASSIST.

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