XN000022-1989-03-01 — Page 31

WEDNESDAY, MARCH 1, 1989

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REDUCTION IN PROFITS TAX TO 16.5 % PROPOSED * * * * *

A REDUCTION FROM 17 PER CENT TO 16.5 PER CENT IN THE RATE OF TAX ON CORPORATE PROFITS WAS PROPOSED IN THE BUDGET TODAY (WEDNESDAY),

THE FINANCIAL SECRETARY, THE HON PIERS JACOBS, TOLD THE LEGISLATIVE COUNCIL THAT HE ALSO PROPOSED:

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EXEMPTION FROM STAMP DUTY ON CERTAIN STOCK LENDING TRANSACTIONS;

INCREASING THE INITIAL ALLOWANCE FOR EXPENDITURE INCURRED ON QUALIFYING MACHINERY AND PLANT FROM 55 TO 60 PER CENT; AND

THE NEW STANDARD RATE ALSO APPLICABLE TO UNINCORPORATED BUSINESSES AND PROPERTIES,

MR JACOBS ESTIMATED THAT THE 0.5 REDUCTION IN PROFITS TAX WOULD COST $345 MILLION IN 1989-90 AND $695 MILLION IN A FULL YEAR.

THE NEW CORPORATE RATE OF 16.5 PER CENT PROVISIONAL AND FINAL ASSESSMENTS FOR 1989-90.

ON CAPITAL ALLOWANCES, HE SAID THIS WAS LAST PER CENT, IN 1982.

"IN GENERAL, I HOLD THE VIEW THAT IT IS BETTER RATE OF TAX ON BUSINESS PROFITS, LEAVING IT OPEN ΤΟ MAKE THEIR OWN DECISIONS ABOUT INVESTMENTS, HE SAID.

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WOULD APPLY ΤΟ

REVISED, ΤΟ 55

ΤΟ REDUCE THE BUSINESSMEN TO

BUT HE POINTED OUT THAT A MORE GENEROUS REDUCTION THAN WHAT WAS PROPOSING WOULD BE INAPPROPRIATE AT THIS TIME, HAVING REGARD INFLATIONARY PRESSURES.

HE TO

HE BELIEVED THAT IT WAS PREFERABLE THIS YEAR TO GIVE AN INCREASE IN CAPITAL ALLOWANCES BY WAY OF DIRECT ENCOURAGEMENT, BECAUSE MUCH OF THE ADDITIONAL INVESTMENT EXPENDITURE BY BUSINESSES WAS LIKELY TO BE SPENT ON IMPORTED GOODS AND SHOULD NOT CONTRIBUTE INFLATIONARY PRESSURES.

ΤΟ

HE ESTIMATED THE COST TO REVENUE TO BE ABOUT $110 MILLION IN 1989-90 AND $150 MILLION IN A FULL YEAR.

THE INCREASED INITIAL ALLOWANCE OF 60 PER CENT WOULD APPLICABLE TO PROVISIONAL AND FINAL ASSESSMENTS FOR 1989-90.

MR JACOBS ALSO SAID THAT THE REDUCTION IN THE STANDARD RATE TAX WOULD AFFECT THE AMOUNT OF PROFITS TAX ΤΟ BE PAID UNINCORPORATED BUSINESSES, AND REDUCE YIELDS FROM PROPERTY TAX.

BE

OF

BY

/HE ESTIMATED