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PUBLIC FINANCES
The basis of rateable value is the annual letting value of a 'tenement', by which is meant any land or building (or part thereof) held or occupied as a distinct or separate tenancy or under licence from the Crown. The Valuation List covers the rating areas of Hong Kong Island, Kowloon, New Kowloon and also a part of the New Territories adjacent to the main road from Lai Chi Kok to Castle Peak. In Hong Kong Island, Kowloon and New Kowloon rates are charged, with a few exceptions, at 17% per annum of rateable value. In the New Territories (outside New Kowloon) the charge is 11%. The Valuation List is prepared by the Commis- sioner of Rating and Valuation and is frequently revised to bring it up-to-date. Rates are due quarterly in_advance and demand notes are issued by the Accountant General and are payable at the Treasury. There is provision for a surcharge on any rates in arrears. The total rating yield has more than doubled in the last five years and the estimate for 1961-2 is $115,620,000.
There are few exemptions. Premises used for educational, charit- able and welfare purposes are rated, but most of the bodies who run this kind of establishment receive back the amount of any rates paid in the form of direct subventions, or contributions towards rates, or refunds of all or part of the amount paid.
INTERNAL REVENUE
Tax on Earnings and Profits. Income was first subjected to direct taxation in Hong Kong in 1940 with the introduction of the War Revenue Ordinance. This Act was a temporary measure 'for the purpose of raising funds by way of tax on income to assist His Majesty's Government in the prosecution of the War'.
The stated object of the imposition disappeared in 1945 and no attempt was made towards collection after the liberation of the Colony, although the Ordinance was not repealed until 1947.
The calls upon the Colony's finances were such that in 1947 a new source of revenue was essential and it was decided to impose a direct tax on incomes as a permanent measure. The Inland Revenue Ordinance, 1947 followed the principle of the old War Revenue Ordinance in charging tax only on income or profits arising in or derived from the Colony. No tax is charged on income or profits arising outside the Colony whether remitted here or not.