loss of
Government revenue.
The estimated revenue from 8620 million and, although
interest tax in 1983-84 is
indications are that the actual yield will be less, it will still represent a large sum - say, for example only, about the cost of the new Polytechnic,
6.
Of equal importance is the possible effect which the abolition of this tax might have on revenue from profits tax, which could have further serious consequences for Government
revenue. Were I to come to the view that interest tax should
be abolished, I should have to introduce measures to protect the profits tax yield and these measures might be draconian and thus unpalatable. One possibility that has been suggested
--
:
is the imposition of a statutory minimum ratio of equity to debt financing for all businesses, with the consequential disallowance for profits tax calculation purposes of interest payments related to debt financing not secured on the assets of the business and falling below the prescribed ratio. Such a scheme might be broadly feasible, but a great deal of further thought is required. My mind remains open and I intend to re-address the issue in the context of next year's budget.
7.
During the first half of this year, foreign currency
mainly in US dollars
with banks
deposits
and
deposit-taking companies in Hong Kong rose by 25%, while Rung Kong dollar deposits fell by 38. July presented @ changed picture, but it 15 too early to rely on one month's figures showing renewed growth in long Kong dollar deposits. Whereas the rapid growtn เก foreign currency deposits in 1982 was mainly attributable to the massive shift of these deposits to
Hong Kong from other Centres as a result of the removal of interest tax on foreign currency deposits, this adjustment was probably largely completed by the turn of the year. We must therefore look to other factors
continued
to explain the
/growth
No comments yet.
Private notes are available after approval.