Profit levy reduction urged
THE Hong Kong General Chamber of Commerce has urged that profit tax be cut to 15 per cent next year.
The powerful business group said making profits and salaries tax the same rate would rule out the possibility of avoiding tax by paying large salaries to business owners.
Moreover, a lower profit tax would help maintain Hong Kong's competitiveness, said Ian Perkin, the chamber's assistant director and chief economist.
'A lower profits tax rate would also help Hong Kong maintain its competitive position compared to other tax regimes in the region,' he said.
The profits tax is now 16.5 per cent, down from 17.5 per cent in 1993. The flat salaries tax rate for this year is 15 per cent.
Financial Secretary Sir Hamish Macleod revealed in his budget speech in March that the one per cent cut in profit tax rate in 1994 would reduce the Government's revenue by about $1.6 billion.
Mr Perkin, in a submission for the 1995-96 budget, said the substantial surpluses and healthy fiscal position should enable the Government to view the suggestion favourably.
But if a full 1.5 per cent cut is not possible, the chamber would be happy with a one per cent reduction.
The chamber also urged the Government to take effective measures to tackle inflation by addressing the serious labour shortage problem in Hong Kong.
