XN000022-1987-03-18 — Page 18

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WEDNESDAY, MARCH 18, 1987

+THERE ARE STILL SOME DARK CLOUDS AHEAD, NOT THE LEAST OF WHICH IS 'PROTECTIONNISM', AGAINST WHICH WE HAVE NO DEFENCE.

+OUR OPEN ECONOMY IS SUSCEPTIBLE TO ECONOMIC AND POLITICAL SHOCKS AND THE VOLATILITY OF FUNDS OF OUR OWN PEOPLE AND FOREIGN INVESTORS,+ MR POON SAID.

ON THE QUESTION OF BROADENING THE TAX BASE IN HONG KONG MR POON NOTED THAT THE FINANCIAL SECRETARY WAS CONCERNED THAT ANY PACKAGE THAT HAD A MARKED ADVERSE EFFECT ON THE COST OF LIVING AND WAS EXPENSIVE AND DIFFICULT TO ADMINISTER WOULD NOT BE RIGHT FOR HONG KONG.

+IN MY VIEW, A VALUE ADDED TAX TYPE OF INDIRECT TAX COMPLETELY FITS THIS FORMULA AND OUGHT NOT TO BE CONSIDERED,+ HE SAID.

+WHETHER OTHER FORMS OF INDIRECT TAXES WHICH BROADEN THE TAX BASE WITHOUT UNDESIRABLE EFFECTS SHOULD BE INTRODUCED CAN FORM THE BASIS OF FURTHER CONSIDERATION,+ HE ADDED.

TURNING TO THE REVENUE MEASURES FOR 1987-88, MR POON SAID THE MODERATE ADJUSTMENTS PROPOSED ON VARIOUS TAXES, MOSTLY TO TAKE INTO ACCOUNT INFLATION, WERE REASONABLE.

AS TO TAX CONCESSIONS, THE BUSINESS COMMUNITY, WHILE APPRECIATING THE 0.5 PER CENT REDUCTION IN CORPORATE TAX AND PROFITS TAX, WOULD PROBABLY LIKE TO SEE FURT HER REDUCTIONS, PREFERABLY TO THE STANDARD RATE SINCE THE FORMER INCREASES WERE MADE DURING DIFFICULT TIMES.

IN ANY CASE, MR POON SAID, SINCE HONG KONG'S TAX PHILOSOPHY WAS TO HAVE A SIMPLE AND LOW TAX REGIME, THE 0.5 PER CENT REDUCTION WAS AN INDICATION OF GOVERNMENT'S COMMITMENT IN THIS RESPECT.

FURTHERMORE, HE WELCOMED THE PROPOSED INCREASES IN PERSONAL AND CHILD ALLOWANCES AND THE EXTENSION OF THE THIRD BAND OF TAXABLE INCOME IN THE SECOND SCHEDULE OF THE INLAND REVENUE ORDINANCE.

AS TO SEPARATE TAXATION, MR POON SAID HE WAS DISAPPOINTED THAT DESPITE THE LARGE SURPLUS, THE FINANCIAL SECRETARY HAD NOT FOUND IT APPROPRIATE TO BE A LITTLE MORE GENEROUS.

AS TO THE REVENUE WHICH WOULD BE LOST, IF IT WAS INEQUITABLE TO COMBINE THE WORKING WIFE'S INCOME WITH THAT OF HER HUSBAND AND CREATE ADDITIONAL TAX BURDEN, THE INEQUITIES SHOULD BE REMEDIED, HE NOTED.

/IF THE