Financial chief is praised for the measure, which is seen as furthering city's role as a financial hub Henry Tang Ying-yen was applauded yesterday for furthering Hong Kong's status as a financial hub by proposing that estate duty be scrapped. 'It was a good, decisive move,' said Lloyd Deverall, a partner at KPMG. 'I was very pleasantly surprised, but it should have been done a long time ago.' The tax is levied on a person's wealth in Hong Kong at the time of death, and earns the govern- ment an average of $1.5 billion a year. Mr Tang's proposal to cut the tax may have been made easier by the fact that abolishing it will save the government a significant amount in administrative fees. 'We will introduce the relevant bill into this council for deliberation as soon as possible,' Mr Tang said. The government did not indicate when that would happen, but it is widely expected that the deliberations will be concluded within the coming financial year. The move was generally welcomed and expected, although the timing took many by surprise. Deloitte Touche Tohmatsu senior tax partner Yvonne Law Shing Mo-han said she had thought the government would opt for a phased abolition over two years to soften any impact on affected industries and its own finances. 'There's no proof that scrapping estate duties actually brings in more investment, but at least the move is in line with Hong Kong's image as an asset management centre,' she said. 'The downside is that the Inland Revenue Department won't be able to launch tax audits and investigations based on the duty.' Fears that the trust- and estate-planning industry would be hit with staff cuts should also not be exaggerated, said Li Man-fai, president of the Taxation Institute of Hong Kong. Mr Li said the $1.5 billion the government stands to lose through the abolition could easily be recovered by expected investments in the local stock and property markets. He also noted that the trust industry would not be made totally redundant by the move, as estate planning advisory services are still needed. One concern is the uncertainty over when the abolition of the estate tax would become effective, and whether there will be backdating. 'As the bill still needs to be passed, whether or not this will be retrospective is bound to lead to some public arguments,' Mr Li added. 'I would prefer that the date of announcement is the effective date.' However, Paul Chan Mo-po, vice-president of the Hong Kong Institute of Certified Public Accountants, said the consultative process could drag on for several months, and that there was no reason to make it retroactive. 'It would only make things complicated,' he added.