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FINANCIAL SYSTEM AND ECONOMY
Taxes on earnings and profits will yield an estimated $6,493.9 million in the 1980-1 financial year.
Stamp Duty
Fixed and ad valorem stamp duties are imposed on different classes of documents relating to assignments of immovable property, leases and share transfers. Assignments are stamped at a fixed duty of $20 for the lowest range of values (up to $175,000), one per cent for the intermediate range ($175,001 to $250,000) and two and three-quarters per cent for those in excess, with provision for marginal relief at the commencement of higher rates. Lease premia attract ad valorem duty at two and three-quarters per cent; the rates of duty on lease rents vary with the periods of leases. Share transactions require the preparation of contract notes on which buyers and sellers each have to pay at the rate of $3 per $1,000 in value. The estimated yield for the financial year ending on March 31, 1981 is $683 million.
Financial Structure
Duties
There is no general tariff on goods entering Hong Kong but duties are charged on four groups of commodities - alcoholic liquors, tobacco, certain hydrocarbon oils and methyl alcohol irrespective of whether they are imported or manufactured locally. All firms engaged in the import, export, manufacture or sale of dutiable commodities must be licensed.
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On liquors, the basic duty rates are in equivalence from $0.60 a litre on Hong Kong brewed beer to $27.06 a litre on brandy. On tobacco, rates range in equivalence from $8.16 a kilogram on Chinese prepared tobacco to $44.42 a kilogram on cigarettes. Rates on hydrocarbon oils were due to be metricated with effect from January 1, 1981, when they would become $0.50 a litre on motor and aircraft spirits and $0.35 a litre on diesel fuel for motor vehicles. The rate for methyl alcohol is equivalent to $2.18 a litre.
Rates
Rates are levied on the occupation of landed property at a percentage of the assessed rateable value which is, briefly, the annual rent at which the property might reasonably be expected to let. The percentage rate charge is determined annually by resolution of the Legislative Council and, since April 1, 1977, has been 11 per cent in the urban areas, with lower percentages in the New Territories. In the urban areas, the rate is apportioned as seven and a half per cent to general revenue and four per cent to the Urban Council. No Urban Council rate is levied in the New Territories because the council does not operate there.
On April 1, 1980, a programme was completed which brought into the rating system the developed and developing areas of the New Territories and the main outlying islands. However, the effect of the imposition of rates in new rating areas will be cushioned by the application of lower percentage rate charges during the initial five years. Despite the com- pletion of the initial programme, these new areas will be extended from time to time as further development takes place.
Reviews of rateable values of rated properties are carried out periodically, as directed by the Governor, to bring values up-to-date. The last review came into force on April 1, 1977. Plans for a revaluation during 1980 had to be abandoned mainly due to the extension of rent controls to virtually all domestic tenancies in December, 1979.