ENG-1965 — Page 58

FINANCIAL STRUCTURE

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as Personal Assessment is chargeable upon persons who so elect. In that case the individual's income otherwise chargeable to the four separate taxes is aggregated in a single sum which is reduced by personal allowances and charged on a sliding scale. The privilege of election is not available to non-residents.

The standard rate of tax has stood at 124 per cent since 1950. Business profits, interest received from loans and the interest element of purchased annuities are charged to tax at the full standard rate. However, where the profits of a non-corporate business are below $7,000 for any year, no tax is charged and tax chargeable on such business is restricted to one-half of the amount by which the profits exceed $7,000. Property tax is charged on the net rateable value of any land or building in the Colony with the exception of those situated in the New Territories and those wholly occupied by the owner as his residence. The standard rate is charged except for rent-controlled properties, on which it is charged at one-half the standard rate. Salaries Tax is charged on the total income from employment reduced by allowances which are at present: for the taxpayer, $7,000; for his wife, $7,000; for each of the first two children, $2,000; for each of the third to sixth children, $1,000; for each of the seventh to ninth, $500. This makes a maximum allowance for children of $9,500. Premiums paid for life insurance are allowed to an amount not exceeding one-sixth of the amount by which the income exceeds $7,000. Tax is charged on a scale which begins at 24 per cent (one-fifth of the standard rate) on the first $5,000 of the net income and rises by 2 per cent on each subsequent $5,000 until, at $45,000, the maximum of 25 per cent (or twice the standard rate) is reached. The total Salaries Tax payable by any individual is restricted to an amount not exceeding the standard rate on his gross salary.

It is estimated that the revenue from Earnings and Profits Tax during the financial year 1965-6 will be $338 million.

Estate Duty generally follows the lines of the British tax of the same name. Duty is assessed only on that part of an estate which is in Hong Kong. The rates of duty range from 3 per cent on estates valued between $100,000 and $200,000 to 40 per cent on estates over $15 million. Yield for the year ending 31st March 1966 is estimated at $25 million.