THE ECONOMY
With the exception of only four years (1974–5, 1982-3, 1983-4 and 1984-5) in the past 20 years, the General Revenue Account has shown à surplus of income over expenditure at the end of each year. The accumulated net surpluses on the General Revenue Account form the government's fiscal reserves. These secure the government's contingent liabilities and ensure that it is able to cope with any short-term fluctuations in expenditure relative to
revenue.
The Urban Council and Regional Council, which operate through the Urban Services Department and Regional Services Department respectively, are financially autonomous. They draw up their own budgets and expenditure priorities. The expenditures of the two councils are financed mainly from a fixed percentage of the rates from property in the Urban Council area (Hong Kong, Kowloon and New Kowloon) and in the Regional Council area (New Territories). Additional income derives from fees and charges for the services the councils provide.
The government has agreed to provide a grant of $273.6 million per annum to the Regional Council for three years from 1988-9 to 1990-91 to enable the council to finance all new projects in its capital works programme.
The Housing Authority, operating through the Housing Department, is also financially autonomous. Its income is derived mainly from rents. If the authority's cash flow is inadequate to meet the construction costs of new estates, it may request an injection of capital by the government. The authority is provided with land on concessionary terms for the construction of public rental housing. Part of the authority's recurrent expenditure, for such activities as clearances and squatter control, is financed from the General Revenue Account. The authority is also responsible for carrying out a programme of squatter area improvements which are funded from the Capital Works Reserve Fund.
Revenue Sources
Duties are levied on six groups of commodities - hydrocarbon oils, alcoholic liquor, methyl alcohol, tobacco, non-alcoholic beverages and cosmetics. The Customs and Excise Department is responsible for collecting and protecting duty revenue. The Dutiable Commodities Ordinance imposes controls on the import, export, manufacture, sale and storage of dutiable items. In 1989-90, $4,628 million was collected in duties, compared with $4,173 million in 1988-9.
Specific duty rates on alcoholic liquors range from $1.60 a litre on cider and perry to $57 a litre on brandy. In addition, duty is payable at the rate of 35 per cent of the c.i.f. value of spirits, champagne and other sparkling wines, and 20 per cent of the c.i.f. value of wines. On tobacco, duties range from $60 a kilogram on Chinese-prepared tobacco to $240 per 1 000 cigarettes. On motor and aircraft fuels the duty is $3.58 a litre, and on diesel oil for road vehicles it is $1.78 a litre. Duty is levied on methyl alcohol at a rate of $5.39 a litre, and on non-alcoholic beverages at $60 a hectolitre. On cosmetics there is a duty at 25 per cent of the c.i.f. price of imported products and the wholesale price of locally-manufactured products.
More details on Revenue from Duties are at Appendix 11.
Rates are a tax on the occupation of landed property. They are charged at a percentage of the rateable value of property, which is an estimate of the annual rent at which the property might reasonably be expected to let. The percentage charge is fixed annually by the Legislative Council. For 1990-91, the charge is seven and a half per cent.
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