XN000022-1987-03-18 — Page 35

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WEDNESDAY, MARCH 18, 1987

ON THE WIDELY CRITICISED AIRPORT DEPARTURE TAX, MR SOHMEN SAID WHILE THE TAX WAS PRODUCTIVE AND COST EFFECTIVE, THESE WERE NOT IN THEMSELVES GOOD ENOUGH REASONS FOR IT NOT TO BE REDUCED IN TIMES OF SURPLUS, SINCE IT WAS INCREASED IN DEFICIT YEARS FOR THE PURPOSE OF RAISING ADDITIONAL REVENUE.

WITH MANY NEW INVESTMENTS IN HOTELS AND EXHIBITION AND CONVENTION FACILITIES COMING TO FRUITION OVER THE NEXT FEW YEARS, EVERYTHING POSSIBLE SHOULD BE DONE TO MAINTAIN HONG KONG'S COMPETITIVE EDGE IN TOURISM AND BUSINESS TRAVEL, HE SAID.

+ALTERNATIVELY, AND IF THE FINANCIAL SECRETARY REMAINS STUBBORNLY COMMITTED TO THIS TAX, PERHAPS HE SHOULD IMAGINATIVELY CONSIDER IT AS A POSSIBLE SOURCE FOR THE SOLUTION OF THE CURRENT PROBLEMS RELATED TO CONSUMER PROTECTION, FOLLOWING THE REGULAR FAILURES OF TRAVEL AGENCIES AND GOVERNMENT'S APPARENT RELUCTANCE TO GET TOO MUCH INVOLVED IN AN EFFECTIVE SUPERVISORY ROLE OVER THEM, HE SAID.

TURNING TO DOUBLE TAXATION, MR SOHMEN SAID HE WAS DISAPPOINTED THAT NOT MORE PROGRESS HAD BEEN MADE ON THAT FRONT TO DATE.

+THE PROPOSED TIME-APPORTIONMENT ARRANGEMENTS ARE WELCOME BUT ARE BEING INTRODUCED FOR THE SAKE OF ADMINISTRATIVE CONVENIENCE AND DO NOT ADDRESS THE QUESTION OF DOUBLE TAXATION WHICH IS PARTICULARLY RELEVANT IN THE LIGHT OF THE STRENGTHENING ECONOMIC LINKS WITH THE PEOPLE'S REPUBLIC OF CHINA, HE SAID.

HE MENTIONED A NEW PROBLEM LOOMING AHEAD FOR THE LOCAL SHIPOWNING INDUSTRY RESULTING FROM THE PASSAGE OF THE U.S. TAX REFORM ACT OF 1986.

THIS LEGISLATION IMPOSED A TAX LIABILITY ON THE BENEFICIAL OWNERS FOR GROSS FREIGHT EARNINGS FROM SHIP TRADING TO U.S. PORTS IRRESPECTIVE OF THE VESSELS' FLAG.

+ IF THE TERRITORY OF DOMICILE OF THE BENEFICIAL MAJORITY OWNER OF THE VESSEL CONCERNED, SUCH AS HONG KONG, HAS NO AGREEMENT WITH THE UNITED STATES PROVIDING FOR MUTUAL EXEMPTION OR REDUCTION OF TAX LIABILITY, OWNERS MAY POSSIBLY NEED TO CONSIDER SUCH EXTREMES AS PHYSICAL RELOCATION FROM HONG KONG, MR SOHMEN SAID.

HE NOTED THAT THE SHIPPING COMMUNITY WAS PRESENTLY WORKING ON MORE BACKGROUND FOR APPROPRIATE LIAISON WITH THE FINANCIAL SECRETARY AND HIS SENIOR ADVISERS.

/ON THE SIZE