Both profits and salaries tax will remain unchanged in the new financial year. This means the profits tax rate will stay at 16 per cent, which will please business leaders who had feared a rise of a half to one percentage point. Personal tax and allowances will be kept at the same levels. Mr Tsang said the profits tax in the SAR was 'extremely business-friendly' and one of the lowest in the world. Members of the Executive Council on Tuesday expressed opposite views on the issue. Businessmen Henry Tang Ying-yen and Raymond Chien Kuo-fung were opposed to any rise in the tax, but unionist Tam Yiu-chung supported an increase. Mr Tsang said he had rejected a proposal to introduce a progressive profit tax system. He said that forcing enterprises with bigger marginal profits to pay tax at a higher rate would complicate the simple tax system and place the tax burden on an even smaller number of companies. 'This would dampen the enthusiasm of investors and lead to more rampant avoidance,' he said. He believed there was a strong case to cut personal and other tax allowances this year after a series of concessions in the past budgets. He pointed out 60 per cent of working people did not pay any salaries tax, and only 0.3 per cent paid the standard rate of 15 per cent. 'This [reducing the allowance] would help to widen the tax net,' he said, saying more salary earners should share the tax burden. 'But I have decided not to take such a course of action this year because our economy is still at an early stage of recovery.'