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Income Tax MOST taxpayers will have a modest reduction in their bills under the proposals unveiled by Sir Hamish.

  The personal tax allowance will be increased slightly by 9.7 per cent from $72,000 to $79,000 in the coming fiscal year - compared with the dramatic 29 per cent rise for the current year.

  The allowance for married couples will be adjusted correspondingly from $144,000 to $158,000.

  Allowances for the first and second child will be increased also by 10 per cent from $20,000 to $22,000.

  Some tax experts noted the reduction would be offset by this year's salary increase which is predicted to be about 10 per cent.

  The tax committee chairman of the Hong Kong Association of Accountants, Tim Lui Tim-leung, said the Budget was prudent and realistic.

   He said the increases in the allowance were acceptable after last year's adjustment.

  'Individuals would not benefit a lot [from the adjustment], everything goes in line with the inflation,' he said.

  Legislator and unionist Lee Cheuk-yan said that the increase would do little to improve the living standards of the lower income group.

   Mr Lee said: 'The 10 per cent increase in the allowance does not mean much after it's offset by inflation. There was no corresponding increase in their salary.'   Government estimates show the lower income groups will receive the biggest cut in terms of percentage.

  For example, a married couple with two children earning $17,000 a month will pay 90 per cent less taxes, which represents $30 a month in real terms.

  For a sandwich class household with no children earning $22,000 per month, tax bills will be cut by $233 a month, or $2,800 a year.

  Taxpayers who live with a dependent parent or grandparent would be given a further concession with the doubling of an additional allowance from $3,000 to $6,000.

  Together with a new allowance for disabled dependents, Sir Hamish expected the tax burden of about 96 per cent of taxpayers would be eased.

  The Financial Secretary believed his proposals would lighten the tax bills of the vast majority of salaries taxpayers, 'not dramatically but nonetheless usefully'.

  Sir Hamish maintained that a 'cautious' approach would be necessary in considering tax measures which would draw on the territory's reserves.

  The concessions are expected to cost the Government a total of $1.2 billion in the coming financial year and $7.7 billion up to 1997-98.

  Sir Hamish defended suggestions that the administration had not done enough for the sandwich class.

  'Sandwich class taxpayers do benefit from this year's Budget,' he said.

  He said it was vitally important for the Government to maintain a grip on expenditure and not to have a 'spending spree'.

  The administration, Sir Hamish said, remained committed to its promise of meeting social needs in areas such as welfare through the re-deployment of resources.



Modest cuts for majority of taxpayers