Cautious moves 'justified'
A CAUTIOUS approach was justified in his revenue proposals, Sir Hamish said.
He said the scope for reform of Hong Kong's 'already very simple' tax system was limited, and so was the scope for further reductions if the revenue base was not to be unduly eroded.
'In addition, during the transition it is particularly desirable to keep our reserves at a healthy level. This has to be a key element in our Budget strategy.' Sir Hamish said he always had in mind the principles of rewarding enterprise and promoting equity.
In the past three years, he said he had reduced the burden of direct taxation, particularly for the sandwich class. He had abolished redundant indirect taxes which complicated the system and produced little revenue, and he continued to deter tax evaders.
The benefits to the taxpayers had been very considerable, he said.
They are: The basic and married person's allowances have increased by 37 per cent in real terms; The proportion of the workforce exempt from taxation has increased to 62 per cent from 49 per cent; The proportion paying salaries tax at standard tax rate has dropped to two per cent from five per cent; The number of indirect taxes has decreased to 12 from 15.
