ENG-1971 — Page 85

FINANCIAL STRUCTURE

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A single assessment aggregating his total Hong Kong income, excluding dividends, granting personal allowances, and charging the same sliding scale of tax as for Salaries Tax is then made, with a set-off being allowed of any of the four separate taxes already paid.

The personal allowances at present are: 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 child $1,000 and for each of the seventh to ninth child $500. This makes a maximum allowance for children of $9,500. There is also an allowance for life insurance premia not to exceed 10 per cent of the capital sum insured or one-sixth of the amount by which the income exceeds $7,000. Provision was made, with effect from the year of assessment 1970-1, for an allowance of $2,000 for dependent parents resident in the Colony, an allowance of $3,000 for a working wife and additional allowances of up to $3,600 for people in the lower income brackets. The sliding scale of tax starts at 24 per cent on the first $5,000 of net income and increases at each subsequent $5,000 stage until at $45,000 a maximum rate of 30 per cent is reached, with a subsequent limitation that the total Salaries or Personal Tax chargeable cannot exceed 15 per cent of gross income.

It is estimated that the revenue from Earnings and Profits Tax during the financial year 1971-2 will be $873 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. Estates valued at less than $200,000 are exempt from duty. The rates of duty range from five per cent on estates valued between $200,000 and $300,000 to 20 per cent on estates over $2 million. Yield for the year ending March 31, 1972, is esti- mated at $22 million.

Stamp Duty is also modelled on the British pattern with fixed duties and ad valorem duty being charged according to the type of document. The lowest fixed duty is 15 cents on bills of lading and receipts and the highest $20. Ad valorem duty ranges from 10 cents on $500 to $2 on $100. For conveyance of land there is a fixed duty of $20 where the sale price does not exceed $20,000, one per cent ad valorem duty where the sale price exceeds $20,000 but does not exceed $40,000 and two per cent where consideration is in excess of $40,000, with provision for marginal relief. There is also an ad valorem duty of two per cent payable on lease premia. The estimated yield from stamp duty during 1971-2 is $198 million.