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THE ECONOMY
is financed mainly from a fixed percentage of the rates from property in the Urban Council area (Hong Kong, Kowloon and New Kowloon) and all the rates from property in the Regional Council area (New Territories), and from the fees and charges for services provided by the councils.
The Housing Authority, operating through the Housing Department, is also financially autonomous. Its income is derived mainly from rents. Where cash flow is inadequate to meet the construction costs of new estates, the authority borrows from the Development Loan Fund on concessionary terms. The Housing Authority is provided with land at nil premium, but the value of the land is shown in its balance sheet as a government contribution. Part of the authority's recurrent expenditure is financed from General Revenue for such activities as squatter control and the management of temporary housing areas. The authority is also responsible for carrying out a programme of squatter area improvements funded from the Capital Works Reserve Fund.
Revenue Sources
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There is no general_tariff on goods entering Hong Kong, but duties are charged on seven groups of commodities irrespective of whether they are imported or manufactured locally. These are hydrocarbon oil, intoxicating liquor, non-intoxicating liquor, methyl alchohol, tobacco, non-alcoholic beverages and cosmetics. All firms engaged in the import, export, manufacture or storage of these commodities must be licensed and, additionally, a sale licence is also required in certain cases.
Duty is payable on European-type liquor, except beer, cider and perry, at the rate of 20 per cent of the c.i.f. value of the liquor and, in addition, at the relevant specific duty rates. The specific duty rates on alcoholic liquors range from $1.20 a litre on beer to $60 a litre on brandy. On tobacco, the rates range from $40 a kilogram on Chinese prepared tobacco to $210 a kilogram on cigarettes. On motor and aircraft spirits the duty is $2.30 a litre and on diesel oil for road vehicles it is $1.15 a litre. On methyl alcohol the duty is $4 a litre. On non-alcoholic beverages the duty is $60 a hectolitre. There is a 25 per cent ad valorem duty on the c.i.f. price for imported, or on the wholesale price for locally produced, cosmetics.
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 be let. New valuation lists are prepared periodically as directed by the Governor, enabling the rateable values to be reviewed and updated in line with the market rental levels. The current lists came into effect on April 1, 1984, with all rateable values determined by reference to rents as at July 1, 1983. For newly assessed premises, the rateable values are also based on rental levels as at this reference date. The percentage charges on rateable values are determined annually by resolution of the Legislative Council. For 1986-7 the charge is six per cent. To cushion the impact of the increase in rates on rate- payers following the 1984 revaluation, a relief scheme was introduced on April 1, 1984. Under this scheme, the maximum increase in the rates payable for any property in any year will not exceed a prescribed percentage of the amount payable in the preceding year. The percentage prescribed for 1986-7 is 20 per cent.
Rates are payable quarterly in advance and exemptions are few. However, the govern- ment generally provides financial assistance towards the payment of rates to non-profit- making educational, charitable and welfare organisations if the premises they occupy are being run in accordance with an approved target or policy. No refund of rates is allowed for vacant domestic premises but half of the rates paid may be refunded in the case of vacant non-domestic premises.