CONFIDENTIAL # #
2 -
XCC(73)58
4.
The representatives of the associations therefore asked for a reduction to 3% in respect of industrial property. If the rateable value method of assessment is to be used it is not thought desirable to distinguish between the owner of one type of property and another. A concession to the industrialist could equally give rise to a claim from the small flat owner for special treatment and so forth. But there is another factor to be borne in mind: the difference in revenue derived from an assessment of 5% or 3% (i.e. a reduction of $13 million to $8 million) is so small in relation to the total sum of revenue to have been collected under the previous method of assessment (i.e. $150 million a year at the end of phasing in), that it is not considered to be worthwhile risking continuing opposition and irritation. It is thought, if the rateable value system as outlined in Annex B commends itself to Honourable Members, that the basis for assessment should be 3%. An assessment based upon rateable value could be collected by means of a supplementary payment on the rates payable in respect of a property held on a renewable Crown lease. This method of collection would have considerable administrative advantage and would enable legislation to proceed with the minimum of delay.
5.
As a consequence of departing from the previous policy, considerable revenue will be abandoned. It will be made quite clear, in announcing the new basis for assessment, that the revenue may have to be raised elsewhere to avoid cutting back expenditure programmes, if this can be done without endangering the economy. Property owners, who generaly represent those more able to contribute revenue and who will benefit from this retreat from previously stated policy, would have to be called upon to contribute a substantial proportion of the additional revenue to be raised.
6.
The feasibility of introducing any new provision relating to Crown rent at a time when domestic rents have been frozen has been questioned. While the two matters are separate they will no doubt be linked in the minds of the public. However, Crown rent at 3% will be very low and it is considered that it will not impose an unreasonable burden on property owners.
7.
Some properties which fall to be renewed are not assessed to rates. In these cases the Commissioner of Rating and Valuation will assess a hypothetical rateable value for the purpose of calculating the reassessed rent.
8.
Many property owners have already agreed their reassessed renewal rent. The total annual rental in these cases amounts to some $20 million. While these rents were freely agreed it is nevertheless thought that in fairness the new policy, if approved, should apply to these owners, and that the change to the new method of assessment be made if it results in a lower level rent this may not be the case for all leases, some of which were renewed many years ago. Should refunds be involved, vote provision will have to be approved by the Finance Committee of the Legislative Council.
CONFIDENTIAL
C.S. 166
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