THE ECONOMY
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same time, the administration seeks appropriation of the total estimated expenditure on the General Revenue Account.
The estimates of expenditure contain details of the estimated recurrent and capital expenditure of all government departments, including estimates of payments to be made to subvented organisations and estimates of transfers to be made to the statutory funds.
For the past 10 years, the government's consolidated account has achieved a surplus every year. The accumulated surpluses, which form the government's fiscal reserves, are available to meet any calls on the government's contingent liabilities and enable the government 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 expen- ditures 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 is derived from fees and charges for the services the councils provide.
The Hong Kong Housing Authority, operating through its executive arm, the Housing Department, is also financially autonomous. Its income is derived mainly from flat sales and domestic and non-domestic rentals. If its 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 to build public rental housing and Home Ownership Scheme housing. Part of the authority's recurrent expenditure, for activities such as clearances and squatter control, is financed from the General Revenue Account.
Trading funds are individual financial and accounting entities set up to provide specific government services within the overall government accounting system. Unlike the accounting system for the rest of government revenue from services provided by trading funds is credited to the funds rather than to the General Revenue Account, and all trading fund expenditure in providing the services is met from the funds rather than through annual appropriation.' |
Revenue Sources
Hong Kong's tax system is simple and relatively inexpensive to administer. Tax rates are low, and the government accords a high priority to curbing tax avoidance and evasion. The major sources of revenue are salaries tax and profits tax. Others include rates on property, stamp duty on property and stock market transactions, betting duty and duties on certain specified commodities. (For the major sources of revenue, see Appendix 10).
The Inland Revenue Department collects over 50 per cent of total revenue, including earnings and profits tax, stamp duty, betting duty, estate duty and hotel accommodation tax. Revenue from these sources is collectively described as internal
revenue.
Earnings and profits tax, which alone accounted for about 42 per cent of total revenue in 1994-95, is levied under the Inland Revenue Ordinance. Persons liable to