TNAG-1725-FCO40-2438-Minutes-and-Hansards-of-the-Legislative-Council-of-Hong-Kong-1988 — Page 54

le

94.

Examples of the effects of the personal taxation Concessions upon various categories of taxpayers, together with comparative tables, are set out in an Appendix to the printed version of this speech (46).

Profits tax

95.

ital

As to profits tax, I propose a reduction in the rate

"per can't por cent of tax on corporate profits from 188 to 17. The cost of the

reduction proposed is $370 million in 1988-89 and, for a full

pay cent year, $760 million.

The new corporate rate of 178 will apply to

provisional and final assessments for 1988-89.

We are

96.

Some have argued that a stimulus should be provided to

the manufacturing sector through an increase in capital

allowances for expenditure incurred on the provision of plant

and machinery. As I said earlier, in 1987 there was no

reluctance on the part of manufacturers to invest. seeing more and more effort being made to increase capacity, improve productivity and enhance profitability. I do not believe that the selective inducement of an increase in capital

allowances is what is needed at this time. Instead, I consider

that the

the proposed reduction in the rate of tax on corporate

profits will provide appropriate and proper encouragement to all

those in business.

(46) Appendix F(3).

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