XN000022-1989-04-27 — Page 20

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THURSDAY, APRIL 27, 1989

COMMENTING ON OTHER TAXATION ISSUES, MR WONG SAID: "I DISAPPOINTED IN THE HALF PER CENT REDUCTION IN THE STANDARD TAX RATE.

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"I KNOW THAT THE FINANCIAL SECRETARY WAS WORRIED ABOUT INFLATION AND THAT A FURTHER DROP COULD BE SAID TO BE INFLATIONARY, HE SAID.

HOWEVER, MR WONG QUESTIONED WHETHER A GREATER REDUCTION WOULD AUTOMATICALLY MEAN HIGHER PERSONAL EXPENDITURE LEADING TO MORE INFLATION AND THAT WHETHER THERE SHOULD HAVE BEEN SOME ENCOURAGEMENT TO SAVINGS SUCH AS HIGHER TAX LIMITS FOR PROVIDENT CONTRIBUTIONS BY EMPLOYEES.

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HE ALSO SAID THE INCREASE OF 5 PER CENT TO 60 PER CENT OF INITIAL ALLOWANCE COULD HARDLY BE SAID TO BE THE INCENTIVE FOR INVESTMENT IN HIGH TECH LABOUR SAVING DEVICES IN HONG KONG.

HE SAID IF GOVERNMENT MADE THE ENTIRE INVESTMENT DEDUCTIBLE THE YEAR OF ACQUISITION, NO ANNUAL ALLOWANCES WOULD BE NEEDED.

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HE ALSO SAID THE VENTURE CAPITAL MARKET'S REQUEST TO CLARITY OF TAX TREATMENT ON THE PROFIT/LOSS ON DISPOSAL OF INVESTMENTS SHOULD BE SYMPATHETICALLY TREATED BECAUSE THEY WERE ASKING CERTAINTY OF TAX TREATMENT IN WHAT WAS OTHERWISE A VERY UNCERTAIN RISKY BUSINESS.

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COMMENTING ON MEASURES TO SIMPLIFY THE TAX STRUCTURE AND REDUCE INEQUITY IN TAXATION IN THE BUDGET, MR WONG SAID: "FIRSTLY, THE 10 PER CENT RULE FOR CHARITABLE DONATIONS SHOULD BE REVIEWED.

"IF WE NEED A NEW WING OF A HOSPITAL COSTING HK$100 MILLION, THE COST TO THE GOVERNMENT OF A TOTALLY DEDUCTIBLE DONATION IS

ONLY $15 MILLION FOR AN INDIVIDUAL, ASSUMING HE HAS TAXABLE INCOME OF THAT AMOUNT," HE SAID.

"WHAT IS THE LOGIC OF LIMITING THAT TO 10 PER CENT OF HIS TAXABLE INCOME ONLY FOR THE GOVERNMENT TO PAY THE OTHER 90 PER CENT?" HE ASKED.

IN ADDITION, MR WONG POINTED OUT THAT SINCE THE LAST REVIEW OF THE ESTATE DUTY BAND IN 1982, INFLATION HAD GATHERED ГАСЕ AND THE BANDS SHOULD NOW BE UPWARDLY ADJUSTED.

HE ALSO SAID THE LOCATION OF ASSET TEST WAS A POWERFUL DISINCENTIVE ΤΟ KEEP ANY ASSET IN HONG KONG AND THAT ESTATE DUTY SHOULD BE ABOLISHED ALTOGETHER.

"THIRDLY. IF SIMPLICATION OF THE TAX SYSTEM WAS REALLY THE OBJECTIVE, I WOULD ADVOCATE THE REPEALING OF THE CLAW BACK PROVISIONS IN SALARIES TAX INSTEAD OF GRANTING THE HALF PER CENT REDUCTION IN THE STANDARD RATE, MR WONG SAID.

/HE POINTED

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