XN000022-1997-03-12 — Page 52

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No tax relief for housing and profits tax level unchanged

No tax relief for housing expenses will be introduced and the level of profits tax will remain unchanged in the 1997/98 fiscal year, the Financial Secretary, Mr Donald Tsang, said today (Wednesday) in his Budget speech.

He said some members of the Legislative Council had called for a tax allowance to cover spending on mortgage interest or even rental payments and some had suggested that some form of tax concession for first-time home buyers should be provided.

While he had considerable sympathy with the family which was investing a substantial part of its monthly income in buying their own home, it was also a government objective to encourage as many families as possible to become home

owners.

"Nevertheless, it would be wrong in principle to create a general tax concession, regardless of the individual family's needs, to cover investment in housing," said Mr Tsang.

Any help which the Government provides to promote home ownership should be given specifically to those families which need such assistance, he said.

"For this reason, we have established the Home Ownership Scheme, the Sandwich Class Housing Scheme and the Private Sector Participation Scheme. These have already helped some 220,000 households to buy their own homes.

"I believe that these programmes are far more effective than tax relief would be," said Mr Tsang, pointing out that today, more than 50 per cent of households own their own home.

Mr Tsang said he did not propose to make any changes this year to the level of corporate profits tax.

"By comparison with our competitors in the region, our level of Profits Tax is already very low. We are still highly competitive even when we look at their effective tax rates (that is, the actual tax paid after all tax concessions and deductions have been applied)," he said.

Mr Tsang noted that members' views on profits tax were mixed.