XN000022-1996-03-06 — Page 24

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Question (in Cantonese): Again on stimulating the economy. Why is it that you don't want to reduce the profits tax rate? And is the tax base too narrow, so next year when we have a poorer than expected economy, then would you have trouble?

FS (in Cantonese): Now what do you want? Do you want me to widen the tax base or reduce the profits tax rate? That is two separate things really. If you want to reduce the profit tax rate that is a very costly exercise. As I said, for every percentage of deduction we would have to pay a heavy price for that. And also, for people in the business sector, really I dare say they would not mind so much about how much profits tax they have to pay and what is important is they must make money first before they worry about taxes.

As I said in my Budget Speech, there was a survey done and for most in the business sector, especially senior executives and proprietors, they do not regard profits tax as their prime concern. So I think it is important that we consider where we should offer tax concessions - on salaries tax or profits tax. And after consideration, because of limited resources we decided we would offer tax concessions to salaries tax payers because that would benefit the community more. And I think that is the right approach.

Question (Oriental Daily, Chan Ka-lai) (in Cantonese): Why do you have to cut stamp duty for the low and medium priced property? Are you trying to stimulate the property market and do you expect the property market to go up?

FS (in Cantonese): Well, it is now stable, as we have said, and we do not really see speculation and we have a very sound and stable market and the measures that we have put in place have worked. What we are doing now, in fact, is in response to legislators; they want us to do something particularly for those who buy a small or medium sized property and so that is what we are trying to do. And we want to encourage home ownership in Hong Kong. This is very important, it will create social and political stability. And it has nothing to do with our trying to boost the property market and I don't think you should further speculate on the reasons.

Now what are we talking about, what sort of property are we talking about? We are talking about HOS flats. Those are not the flats for speculation, I am sure you are aware of that.

Question: To put it rather bluntly, what went wrong with the Airport Tax last year?

FS: Well, I just got a lot more flack than I thought I deserved. It was originally $150. I slashed it to $50. I thought I'd have got overall applause but indeed I did not have the applause. That is one thing wrong - on a personal level.