TNAG-1641-FCO40-2288-Budget-of-Hong-Kong-1987 — Page 216

3.2.87

Profits Tax

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128.

As to profits tax, I propose a reduction in

the rate of tax on corporate profits from 18 1/2% to 18%. The cost of the reduction proposed is $135 million in

28 and, for a full year, $310 million. The new

corporate rate of 18% will apply to provisional and final

assessments for 1987-88.

129.

I am aware that some have argued for a more

substantial cut in the rate of corporate profits tax on

the ground that this would provide a stimulus to the

business sector. I do not consider that we should move

too sharply at this stage. But I hope that this clear

indication of the direction in which I would like to move

will provide, if not a stimulus to the corporate sector,

then at least sound reason for confidence that we remain

determined to maintain a low tax regime in which business

can flourish. Gentle progress will serve us best.

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