ENG-1975 — Page 64

FINANCIAL STRUCTURE

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the overall effective rate of tax is limited to 15 per cent of the income before deducting personal allowances. These allowances are: for the taxpayer $10,000; his wife $10,000; the first child $3,000; the second child $2,500; the third child $1,500. The allowance for the fourth to sixth child is $1,000 each, and for the seventh to ninth child $500 each. Apart from the deduction of expenses necessarily incurred in production of the in- come, and charitable donations up to 10 per cent of assessable income, there are no other allowances.

A further feature of the Inland Revenue Ordinance is the right of a taxpayer to elect for what is known as Personal Assessment. This aggregates his income from the four sources mentioned earlier and gives him the benefit of the same personal allow- ances and sliding scale of tax as would be allowed for Salaries Tax purposes. Tax paid on the individual sources of income is allowed to be set-off.

It is estimated that the taxes on earnings and profits will yield $2,247 million in the financial year 1975–6.

Estate Duty is imposed on that part of a deceased person's estate which is situated in Hong Kong. As from April 1, 1974, the estate value exemption limit was raised from $200,000 to $300,000. The rate of duty varies from six per cent on estates valued between $300,000 and $400,000 to 15 per cent on those in excess of $1 million. The yield for the year ended March 31, 1976 is estimated at $40 million.

Stamp Duty imposes fixed duties on certain classes of documents and ad valorem duties on others. The estimated yield from Stamp Duty for the year ended March 31, 1976 is $298 million. This is a considerable drop from earlier years, reflecting the fall in values and turnover on the stock and property markets.

Entertainments Tax was re-introduced on admission charges to cinemas on April 1, 1975, after two years of the tax being levied only on the price of admission to race meetings. The tax is charged at varying rates depending on price of admission but the average is about 10 per cent in the case of cinemas and 22 per cent in the case of race meetings. The estimated yield for 1975-6 is $24.9 million.

Betting Duty is imposed on bets made on an authorised totalisator or pari-mutuels and on contributions towards authorised cash-sweeps. The duty on bets is charged at either 74 per cent or 11 per cent depending on the type of bet placed, and at 25 per cent on cash-sweep contributions. The duty is recovered from the Royal Hong Kong Jockey Club which holds the monopoly for conducting such operations, including a limited form of off-course betting. The estimated yield for the year ending March 31, 1976 is $119.5 million. As from August 1, 1975 the Betting Duty was further extended to lotteries conducted by a newly established Lotteries Board. Duty is charged at 25 per cent on the proceeds of such lotteries.

Hotel Accommodation Tax is imposed on hotel and guest house accommodation and is levied at the rate of three per cent on the accommodation charges. It will be increased to four per cent on April 1, 1976. For the financial year 1975–6 this tax is estimated to yield $9.5 million.