XN000022-1987-02-25 — Page 22

WEDNESDAY, FEBRUARY 25, 1987

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INCREASED TAX ALLOWANCES, RATE CUT PROPOSED

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INCREASES IN PERSONAL AND CHILD ALLOWANCES, AND A MODEST REDUCTION IN THE STANDARD RATE FOR PERSONAL TAXATION WERE PROPOSED BY THE FINANCIAL SECRETARY, THE HON PIERS JACOBS, TODAY (WEDNESDAY).

PRESENTING HIS BUDGET FOR 1987-88, MR JACOBS PROPOSED TO COMBINE THE EXISTING BASIC AND ADDITIONAL PERSONAL ALLOWANCES TO FORM THE NEW BASIC ALLOWANCE, AND TO SET THE 'ADDITIONAL PERSONAL ALLOWANCE AT $5 000 FOR SINGLE PERSONS, AND $10 000 FOR MARRIED PERSONS.

+TAKEN TOGETHER, THE NEW BASIC ALLOWANCE PLUS THE ADDITIONAL PERSONAL ALLOWANCE WILL TOTAL $34 000 FOR SINGLE PERSONS AND $70 000 FOR MARRIED COUPLES' BELOW THESE INCOME LEVELS THERE WILL BE NO LIABILITY TO TAX,+ HE SAID.

*THE NEW ALLOWANCES AT THEIR MAXIMUM LEVELS WILL DE NEARLY 17 PER CENT HIGHER THAN THE PRESENT COMBINED BASIC AND ADDITIONAL PERSONAL ALLOWANCES.

MR JACOBS PROPOSED THAT THE CHILD ALLOWANCE BE INCREASED, FOR A FIRST CHILD FROM $9 000 TO $11 000, AND FOR A SECOND CHILD FROM $6 000 TO $8 000.

THE NEW ALLOWANCES WOULD BE RESPECTIVELY SOME 22 PER CENT AND 33 PER CENT HIGHER THAN THE PRESENT ALLOWANCES WHICH WERE SET IN 1985.

HE ALSO PROPOSED THAT THE THIRD BAND IN THE SECOND SCHEDULE OF THE ORDINANCE - THE BAND TO WHICH THE 15 PER CENT MARGINAL RATE OF TAX AT PRESENT APPLIES - BE WIDENED FROM $10 000 TO $20 000.

+THIS WILL DEFER BY $10 000 OF INCOME THE POINT AT WHICH THE 20 PER CENT RATE TAKES EFFECT AND, AT THE SAME TIME, WILL INCREASE THE INCOME LEVELS AT WHICH TAXPAYERS ENTER THE STANDARD RATE ZONE,+ MR JACOBS SAID.

MR JACOBS PROPOSED TO REDUCE THE STANDARD RATE FOR PERSONAL TAXATION FROM 17 PER CENT TO 16.5 PER CENT,

HE ADDED: +BECAUSE AN ACROSS THE BOARD INCREASE IN ALL ALLOWANCES WOULD BE EXTREMELY EXPENSIVE, I FURTHER PROPOSE THAT THE NEW ADDITIONAL PERSONAL ALLOWANCES OF $5 000 FOR A SINGLE PERSON AND $10 000 FOR A MARRIED COUPLE DE SUBJECT TO A 10 PER CENT CLAWBACK.

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+BY REINTRODUCING THE CLAWBACK, AM ABLE TO FOCUS THE PROPOSED ALLOWANCES MORE FULLY ON THE LESS AFFLUENT OF THOSE WHO PAY SALARIES TAX OR ELECT FOR PERSONAL ASSESSMENT.

/+THE CLAWBACK