XN000022-1994-03-30 — Page 35

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WEDNESDAY, MARCH 30, 1994

TAX, HE SAID

LIABLE ΤΟ

ON THE PROPOSAL FOR INTRODUCING CAPITAL GAINS PROFITS ARISING FROM TRADING IN PROPERTY WERE ALREADY

PROFITS TAX.

INDEED, OVER THE LAST TWO YEARS, THE INLAND REVENUE HAS STEPPED UP ITS EFFORTS TO TRACK DOWN SUCH TRANSACTIONS.

DEPARTMENT

++

"I AM PLEASED TO SAY THAT THIS HAS ACHIEVED GOOD RESULTS.

HE HIGHLIGHTED SOME PARTICULAR POINTS UNDERLYING THE GOVERNMENT'S RESERVATIONS ON SUCH A PROPOSAL.

CAPITAL GAINS TAX WOULD RUN AGAINST THE GOVERNMENT'S POLICY OF MAINTAINING A SIMPLE, PREDICTABLE AND LOW TAX

A FUNDAMENTAL SYSTEM.

ΤΟ ACHIEVE A SIGNIFICANT DETERRENT EFFECT, THE TAX WOULD HAVE TO BE SET AT A HIGH LEVEL.

IT WOULD ALSO BE EXPLICITLY INTRODUCED AS A TEMPORARY FISCAL MEASURE TO ADDRESS A SHORT-TERM PROBLEM, SO INTRODUCING UNCERTAINTY, HE SAID,

"THIS WOULD RISK SENDING A STRONG NEGATIVE SIGNAL TO LOCAL AND OVERSEAS INVESTORS. THE COMMUNITY AT LARGE WOULD STAND TO LOSE SHOULD THIS HAPPEN."

MOREOVER, IT IS NOT ENTIRELY CLEAR THAT THE EFFECT OF INTRODUCING A CAPITAL GAINS TAX WOULD BE THAT THE MARKET WOULD AUTOMATICALLY CORRECT ITSELF, BRINGING PROPERTY PRICES BACK TO A MORE REALISTIC LEVEL, AND THEREBY BENEFITING END-USERS.

ELSEWHERE, VERSIONS OF SUCH A TAX HAVE HAD MIXED RANGING FROM PUSHING PRICES UP TO BRINGING ABOUT A COLLAPSE PROPERTY MARKET.

RESULTS, OF THE

INCREASED

"HENCE, I MUCH PREFER TO SEEK A SOLUTION IN AN SUPPLY.

IF THAT DOES NOT SUCCEED, THEN I SHALL BE FORCED, RELUCTANTLY, TO REVIEW OTHER OPTIONS, INCLUDING THE CAPITAL GAINS TAX IDEA." SIR HAMISH SAID.

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IMPORTATION OF GRADUATES SHOULD PROCEED QUICKLY

*

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THE GOVERNMENT SHOULD PROCEED QUICKLY WITH THE MODEST TILOT SCHEME TO ADMIT 1,000 GRADUATES FROM CHINA TO TACKLE INFLATION.

THIS WAS STATED BY THE FINANCIAL SECRETARY. THE HON SIR HAMISH MACLEOD, WHEN CONCLUDING THE BUDGET DEBATE IN THE LEGISLATIVE COUNCIL TODAY WEDNESDAY).

SIR HAMISH SAID LEGCO SHOULD BE CONSULTED BEFORE SUCH A WAS ENLARGED.

SCHEME

/"AND THAT