XN000022-1988-04-20 — Page 13

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WEDNESDAY, APRIL 20, 1988

HE SAID THAT IF CONSULTATION WAS NEEDED, HE WAS SURE THAT THE OMELCO TAXATION PANEL, OF WHICH HE IS CONVENER, A9 WELL AS VARIOUS PROFESSIONAL BODIES AND OTHERS CONCERNED WOULD BE PLEASED ΤΟ ASSIST IN SUGGESTING HOW SEPARATE TAXATION FOR WORKING WIVES MIGHT BEST BR INTRODUCED.

MR POON ALSO NOTED THAT IN BRITAIN, THE CHANCELLOR OP EXCHEQUER, MR NIGEL LAWSON, HAD PROPOSED IN HIS 1988-89 BUDGET SEPARATE TAXATION BE INTRODUCED IN THE UK IN APRIL 1990.

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TURNING TO THE $2,000 INCREASE IN THE PERSONAL INCOME TAX ALLOWANCE, MR POON SAID THE INCREASE MERELY COVERED INFLATION IN THE PAST YEAR AND HAD NO REGARD FOR THE EFFECT OF INFLATION OVER THE PAST SEVERAL YEARS.

FURTHERMORE, SUCH ADDITIONAL PERSONAL ALLOWANCE WAS SUBJECT то THE "CLAWBACK" PROVISION WHICH MEANT THAT IT WOULD BE REDUCED AS THE TAXPAYERS' INCOME INCREASED UNTIL IT WAS TOTALLY WITHDRAWN. MR SUGGESTED THAT THE CLAWBACK PROVISION BE ABOLISHED.

MR POON FURTHER SUGGESTED THAT THE BASIC ALLOWANCE PERSONAL INCOME TAX OUGHT TO BE REVISED MORE OFTEN TO BRING IT LINE WITH INFLATION.

THIS WAS AN AREA OVER WHICH A LOT OF GRIEVANCES HAD EXPRESSED, HE SAID, BECAUSE A PERSON WITH MUCH LOWER REAL INCOME ONE WHO DID NOT HAVE TO PAY TAX 10 YEARS AGO WAS NOW CAUGHT IN TAX NET.

SINCE NOT MANY PEOPLE NOWADAYS CHILDREN, IT MAY BE BETTER TO INCREASE THE FIRST TWO BY A BIGGER AMOUNT AND ABOLISH FOURTH CHILD, MR POON ADDED.

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ON THE QUESTION OF INDIRECT TAXATION, MR POON NOTED THAT THE TAX BASE IN HONG KONG WAS EXTREMELY SMALL. IT WAS ESTIMATED THAT ONLY ABOUT 100,000 MIGHT BE PAYING MORE THAN 65 PER CENT OF ALL DIRECT TAXES.

"SINCE MANY PROPLE ENJOYING THE STABILITY, PROSPERITY, AND IMPROVEMENT OF ENVIRONMENT OF HONG KONG ARE NOT PAYING ANY DIRECT TAXES, SOME FORM OF INDIRECT TAX MAY BE CONSIDERED ESPECIALLY IN CASE OF BUSINESS DOWNTURN WHEN DIRECT TAXES ON A SUCH NARROW BASE CAN NO LONGER BE RELIED UPON TO FINANCE OUR FUTURE BUDGETS, HE SAID.

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HE SAID HIS FEELING WAS THAT TO HAVE A PLAN ALONG SUCH LINES RAINY DAYS SHOULD BE CONSIDERED, BUT HE SAW NO NEED OR JUSTIFICATION TO IMPLEMENT IT IF THE GOVERNMENT'S MEDIUM RANGE FORECAST OF HAVING SURPLUSES OF OVER $2 BILLION THROUGH 1990 COULD MET.

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/HE SAID