consideration the need to divide other resources such as office accommodation and the fact that thousands of civil servants in 33 different grades spread over many districts were affected by the reorganization.
7.3 The Secretary was asked whether a decision could have been taken to resume the allocation of the quarters when it emerged that the inter-departmental negotiations were taking much longer than expected. The Secretary informed the Committee that by that stage the quarters had already been empty for several months and any additional period would not have made much difference financially.
7.4 The Secretary accepted that several months' notice had been given prior to setting up the Lands Department but that this had been a busy period for the District Administration. At a time when his main priority had been to provide a continuous service to the public, particularly in the matter of the sale of land, it had been difficult to speed up the negotiations for the division of quarters. His concern not to add to the uncertainties of his staff could have contributed to the delay. The Secretary assured the Committee, however, that of the stock of 125 quarters left with the City and New Territories Administration only four were now empty pending reallocation.
7.5 Conclusions and Recommendations. The Committee accept the importance attached by the Secretary for District Administration to the maintenance of staff morale in the circumstances of a major reorganization of responsibilities and also that the setting up of the Lands Department raised a number of complex issues which could not be rapidly resolved. However, the Committee conclude that the time taken to divide the stock of quarters between the Lands Department and the City and New Territories Administration was excessive.
7.6 The Committec expect that should such circumstances arise in future the question of the division of the quarters will receive the same priority as other matters and that it will be handled in a more efficient and expeditious manner.
CIVIL AVIATION DEPARTMENT
7.7 Paragraphs 125-129. The cost-effectiveness of the Air Passenger Departure Tax collection system. Commenting generally, the Director of Civil Aviation said that the Director of Audit's report was misleading and presented an incorrect interpretation of the events before, during and after the introduction of the air passenger departure tax. The detailed system of control over expenditure might be described as cumbersome and a system for collecting tax from 10 million passengers a year must, to some extent, be complex. However he did not think that it was expensive considering that $400 million revenue was collected and that the effect on the operation of the airport had been reduced to the minimum.
7.8 The Committee asked whether the Government had a policy for paying fees to commercial companies which collect taxes on its behalf. The Deputy Financial Secretary explained that there was no fixed policy and whether a fee is paid depended on the requirements of the particular ordinance. The Cross Harbour Tunnel (Passage Tax) Ordinance (Chapter 274) provided for the payment of a fee to the Cross Harbour Tunnel Company, but no fee had been paid. Likewise, no fee was paid to the collecting agents of entertainment and betting taxes. He explained that the Air Passenger Departure Tax Ordinance (Chapter 140) required the Government to pay a fee. It was incumbent upon the Government to act reasonably and compensate the operators for the cost of providing the tax collection services. 7.9 The Committee asked why the Government had abandoned its original intention of assessing the fees on the basis of a simple formula involving only one flat rate fee for all operators. The Director of Civil Aviation explained that the simple formula was the ideal, but that it was not practical. There were ten different aircraft operators each with different cost levels. In order to ensure that each operator was fully compensated for the costs incurred it would be necessary to fix any uniform fee on the basis of the most expensive operator because under bilateral air services agreements there should be no discrimination against any individual aircraft operator. This would greatly increase the cost to the Government. For this reason, the Government had to ensure that each operator was compensated for his full costs. He explained that the cost estimates submitted by the aircraft operators were monitored in great detail by his department and he had four and a half staff working on it full time.
7.10 The Director of Civil Aviation said that the system was being reviewed but that the question of adopting a simple formula in fixing a flat rate fee had not been specifically included in the review. He said that it would take much goodwill to persuade the operators to accept a flat rate fee that was based on anything other than the costs of the most expensive operator. However, he said he would see what could be done to persuade them. On being asked about the extent of the difference between the costs of the least expensive and the costs of the most expensive operators, the Director of Civil Aviation said that the cost of the most expensive operator was 24 times that of the least expensive. He added that the tax collection was a very complex operation for the operators who not only had to collect the tax but also had to reconcile their records, bank the money, arrange security services, run a tax information counter and control the tax coupons. 7.11 The Director of Civil Aviation explained the difference between the previous passenger service charge and the present air passenger departure tax. The latter was a tax on the passengers whilst the former was a charge on the aircraft operators which had to be reflected in the airport accounts. The air passenger departure tax need not be so reflected. By international agreement airport revenue and expenditure had to be reflected in the airport accounts as a means of ensuring that the charges made on the aircraft operators were not excessive.
7.12 In reply to a question of whether it would be practical for passengers to pay the tax at a separate counter, the Director of Civil Aviation explained that it would put an unnecessary burden on the passengers who would have to make two check-in stops instead of one as at present.
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