High-earning employees and firms should pay a higher rate of tax, according to the Democratic Party. In a submission on next year's Budget, the Democrats suggested two bands on profits tax be introduced. Companies whose taxable profits exceeded $10 million would have to pay at a rate of 17 per cent. Others would continue to pay the present rate of 16 per cent. Party legislator Sin Chung-kai said after a meeting with Financial Secretary Donald Tsang Yam-kuen that big, profitable enterprises should be able to bear the higher rate. 'I believe such a tax rate won't dent the confidence of investors as 17 per cent is still low compared to other parts of the world.' Colleague Cheung Man-kwong said about five per cent of companies had profits of more than $10 million. The party also suggested the standard salaries tax rate should not be capped at 15 per cent. It said only one per cent of taxpayers, which included single people with a taxable income of about $1.4 million per annum, had to pay the standard rate of 15 per cent. They could afford to pay one per cent more, it said. Mr Sin said the Government should look to the high-income group for revenue if it found no other alternative but to raise tax. He said the party supported the adjustment of tax allowances in accordance with inflation. However, despite recent deflation, allowances should not be adjusted, as this would lead to a reduction in consumer spending. Mr Sin said his party mainly differed with Mr Tsang on the amount of acceptable deficits. He said a deficit of no more than $39 billion should be acceptable. That would amount to three per cent of Gross Domestic Product. Mr Tsang maintained his forecast of a deficit of not more than $5.6 billion for next year's Budget was correct. The party also urged the Government to increase spending to create more jobs and stimulate the economy. Only a Budget with a large deficit could help tackle the financial problems.