XN000022-1987-04-01 — Page 2

WEDNESDAY, APRIL 1, 1987

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SIMPLE TAX STRUCTURE SERVING HONG KONG WELL

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SEPARATE TAXATION OF MARRIED WOMEN OR THE INTRODUCTION WORKING-WIFE ALLOWANCE WAS NEITHER DESIRABLE NOR NECESSARY IC HONG KONG, THE FINANCIAL SECRETARY, THE HON PIERS JACOBS, SAID THIS (WEDNESDAY) AFTERNOON.

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WINDING UP THE DEBATE ON THE APPROPRIATION BILL 1987 IN THE LEGISLATIVE COUNCIL, MR JACOBS SAID: +OUR PRESENT SYSTEM, WHICH IS BASED ON THE ABILITY TO PAY, HAS SERVED US WELL BECAUSE IT IS SIMPLE TO UNDERSTAND AND COST EFFICIENT TO ADMINISTER.+

MR JACOBS NOTED THAT A NUMBER OF MEMBERS OF THE COUNCIL HAD ARGUED THAT SEPARATE TAXATION OF MARRIED WOMEN WAS DESIRABLE FROM THE POINT OF VIEW OF SOCIAL JUSTICE.

THE HON PAULINE NG, HE SAID, HAD SUGGESTED THAT SEPARATE TAXATION WOULD BENEFIT THE LABOUR MARKET BY ENCOURAGING WOMEN TO JOIN THE WORKFORCE, WHILST OTHER MEMBERS HAD SUGGESTED THAT AN ALLOWANCE FOR WORKING WIVES BE INTRODUCED.

+THE INCOMES OF HUSBAND AND WIFE ARE AGGREGATED BECAUSE THEIR ABILITY TO PAY TAX DEPENDS ON THE TOTAL AMOUNT OF THEIR INCO AND NOT UPON THE EXTENT TO WHICH EACH PARTNER RECEIVES THAT INCO MR JACOBS SAID.

THE PRESENT SYSTEM OF JOINT ASSESSMENT, HE WENT ON, RECOGNISED THE MARRIED COUPLE AS THE FISCAL UNIT OF CHARGE, AND MET THE REQUIREMENTS OF EQUITY BY ENSURING THAT TWO FAMILIES WITH EQUAL INCOMES WERE LIABLE TO IDENTICAL AMOUNTS OF TAX.

.L.

+ON THE BASIS OF EXISTING ALLOWANCES, SEPARATE TAXATION ON CREATE DIFFERENT RESULTS ON FAMILY TAX BURDENS DEPENDING UN RELATIVE INCOME SPLIT BETWEEN THE TWO WORKING SPOUSES, AMU WHETHER ONE, OR BOTH, SPOUSES ARE INCOME EARNERS, HE SAID.

THE TOTAL TAX PAYABLE AFTER A COMPLICATED PROCESS FROM SEPARATE TAXATION COULD BE THE SAME AS THAT ASSESSED UNDER T PRESENT SYSTEM OF AGGREGATION, HE ADDED.

MR JACOBS POINTED OUT THAT IF SEPARATE TAXATION WERE RED, ONLY ABOUT 16.5 PER CENT OF SALARIES TAXPAYERS WOULD BENEFIT LE THE REMAINING 83.5 PER CENT WOULD NOT.

TIP

+ IN THESE CIRCUMSTANCES I QUESTION WHETHER THE ADDITIONAL RESOURCES NECESSARY TO IMPLEMENT THE PROPOSAL COULD BE JUST HE SAID.

ADOPTION OF SEPARATE TAXATION OVERLOOKED A MARRIED INDIVIDUAL'S INEVITABLY CLOSE ECONOMIC AND FINANCIAL TIES WITH HIS OR HER PARTNER, HE ADDED.

/WITH REGARDS