XN000022-1994-05-11 — Page 3

WEDNESDAY, MAY 11, 1994

1.

MOTION DEBATE ON CAPITAL GAINS TAX ON PROPERTY

FOLLOWING IS THE

SPEECH BY SECRETARY FOR

DONALD

IN THE LEGISLATIVE COUNCIL MOTION TSANG, GAINS TAX ON PROPERTY TODAY (WEDNESDAY):

THE TREASURY, DEBATE ON CAPITAL

MR

MR PRESIDENT,

I

DEBATE

ΤΟ OF A

GRATEFUL FOR THE OPPORTUNITY OFFERED BY THIS AM то LISTEN

THE

INTRODUCTION DIVERSE VIEWS OF MEMBERS ON THE CAPITAL GAINS TAX TO TACKLE HIGH PROPERTY PRICES.

TASK

IN

PROPERTY EFFECTIVE THE GOVERNOR REPEATED OUR

I SHARE MEMBERS' CONCERN ABOUT THE SHARP RISE PRICES IN RECENT YEARS. THE ADMINISTRATION IS KEEN TO TAKE ACTION TO BRING DOWN PRICES TO A MORE AFFORDABLE LEVEL. AND THE FINANCIAL SECRETARY HAVE ON VARIOUS OCCASIONS COMMITMENT TO THIS AIM. WE HAVE RECENTLY SET UP AN INTER-DEPARTMENTAL FORCE, CHAIRED BY MR EASON, THE SECRETARY FOR PLANNING, THE SUPPLY OF AND ENVIRONMENT

LANDS, TO CONSIDER WAYS TO INCREASE

IN THE AND TO DISCOURAGE HOUSING FOR

SPECULATION THE TASK FORCE INTENDS TO COMPLETE ITS STUDY RECOMMENDATIONS ON POSSIBLE SOLUTIONS NEXT MONTH. ONE OF WHICH THE TASK FORCE IS LOOKING AT IS WHETHER A CAPITAL GAINS TAX PLAY A USEFUL ROLE IN COOLING THE OVER-HEATED PROPERTY MARKET.

SITES MARKET.

PROPERTY

AND TO MAKE THE ISSUES CAN

SOME MEMBERS HAVE SPOKEN OF THE INTRODUCTION OF A CAPITAL GAINS I TAX AS A PANACEA CAPABLE OF BRINGING PROPERTY PRICES DOWN QUICKLY. WOULD

TO RESPOND TO THIS VIEW BY LIKE

WITH SHARING THINKING OF THE ADMINISTRATION ON A CAPITAL GAINS TAX.

MEMBERS THE

DEALT

WITH QUESTION SECOND

RECALL THAT ON 9 MARCH THIS YEAR, WILL

I MEMBERS THIS SUBJECT IN SOME DETAIL IN THIS COUNCIL IN MY REPLY TO A RAISED BY DR THE HON YEUNG SUM. IN HIS SPEECH CONCLUDING THE READING DEBATE ON THE APPROPRIATION BILL HELD ON 30 MARCH THIS THE FINANCIAL SECRETARY AGAIN TOUCHED UPON THIS ISSUE.

YEAR,

PARAMETERS OF A CAPITAL GAINS TAX

WHETHER A CAPITAL

WILL IN

GAINS TAX ON PROPERTY TRANSACTIONS DOWN ACTUALLY BRING

HINGES

OF PRICES

ON A

FACTORS, PARTICULAR THE PARAMETERS OF THE TAX AND THE REACTION OF THE MARKET.

A

MEMBERS

NUMBER

PROPERTY SPECULATIVE ARE FAMILIAR WITH THE FACT THAT PROFITS ARE NOT TAX-FRER. AT

FROM PROPERTY PRESENT, PROFITS TRANSACTIONS ARE ALREADY CHARGEABLE TO PROFITS TAX IF THEY ARISE FROM THIS COVERS DEALING. BUSINESS OF

PROPERTY PROPERTY TRADING OR

AS TRANSACTIONS CARRIED OUT BY PROPERTY DEALERS, PROPERTY DEVELOPERS

ASSIGNMENT FOR WELL AS THOSE PERSONS WHO RE-SELL A PROPERTY BEFORE

INTRODUCED QUICK PROFITS.

DEPARTMENT LAST JULY, THE INLAND REVENUE

FILES TO HELP NEW SELECTION CRITERIA FOR OPENING PROPERTY DEALING

A IDENTIFY

TRADE. THOSE PROPERTY TRANSACTIONS CONCLUDED AS PART OF HAS THIS

BROUGHT MORE

THE POTENTIAL TAXPAYERS TO

BY SCRUTINY

SHOULD ADD

OF THE

DUTY DEPARTMENT.

THAT THE ENACTMENT I

STAMP

A (AMENDMENT} ORDINANCE

OBTAIN 1992 ALSO ENABLED THE DEPARTMENT TO MORE EXTENSIVE DATABASE ON PROPERTY TRANSACTIONS, THUS ENHANCING ABILITY TO IDENTIFY CASES WHICH MIGHT HAVE A TAX LIABILITY.

IT'S

/AGAINST THIS