TNAG-0861-FCO40-1071-Legislation-for-shipping-and-port-control-in-Hong-Kong-1979 — Page 63

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Supplementary per sonal allowances of $2,500 for a single person or of $5,000 for a married person were introduced for the first time in 1977. They have been subject to a reduction by 15% of the amount by which the taxpayer's net chargeable income exceeds $12,500 and $25,000 respectively until the entire supplementary allowances are eliminated. Clause 2 of the bill provides that the supplementary allowances should be reduced by 10% instead of by 15% of the amount by which the taxpayer's net chargeable income exceeds $25, 000, in the case of a married person, or $12, 500 in the case of a single person.

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At present the top marginal rate applicable to net chargeable income in excess of $50, 000 a year is 30%. It is proposed to remove the 30% rate so that in future 25% will be the top marginal rate on net chargeable income in excess of $40,000 a year. Clause 3 of the bill at Annex A amends the Second Schedule of the principal Ordinance to provide for a new maximum rate of 25% for salaries tax assess- ments and for personal assessments.

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The effect of these two proposals taken together will be to lift the level of income at which the standard rate applies, to stretch the progression of effective rates and to reduce the effective rate of tax payable by a taxpayer.

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These proposals will apply for the year of assessment 1978-79 (other than assessments of provisional salaries tax for that year) and for all subsequent years of assessments, at a cost of the revenue in 1979-80 of $57 million.

Estate Duty (Amendment) Bill 1979

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This bill (Annex B) seeks to implement a proposal made by the Financial Secretary in paragraph 183 of the budget speech to lift the present exemption limit, set in 1959, of $5,000 to $50,000 on gifts inter vivos. The bill provides that property which notionally passes on death for the purposes of assessing estate duty will not include gifts inter vivos made by the deceased which, in the case of any one donee, did not exceed, in aggregate, $50,000. The proposed amend- ments apply to the estates of persons dying on or after 1st April 1979. The cost to the revenue of this proposal is estimated at $200,000 a year.

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