76. I propose to lower the marginal rates of the second, third and top tax bands by one percentage point from the existing levels of 8, 14 and 20 per cent to 7, 13 and 19 per cent respectively. This proposal will reduce the tax payable by nearly a million people, i.e. three quarters of taxpayers, and cost the Government about $1.5 billion a year.
77. Purchasing a property is an important lifetime decision. To many people, particularly the middle class, mortgage payments are major items of family expenditure. Currently, each taxpayer is eligible for a seven-year salaries tax deduction for home loan interest of up to $100,000 a year. However, the recent increases in mortgage rates have added to their burden. Therefore, I propose to extend the limit for the deduction by a further three years to a total of ten years, subject to the maximum annual deduction of $100,000. This measure will cost the Government some $1.2 billion in 2006?7. We will introduce legislation to give effect to the two foregoing proposals as soon as possible into this Council.