PUBLIC ORDER
Revenue Collection
The department is responsible for the collection of excise duties derived from dutiable commodities stipulated in the Dutiable Commodities Ordinance. These are alcoholic beverages, tobacco, hydrocarbon oil and other alcohol products (i.e. methyl alcohol and ethyl alcohol). During the year, the excise duties collected amounted to $6.64 billion, of which 54.5 per cent came from hydrocarbon oil, 33.3 per cent from tobacco, 12.16 per cent from alcoholic beverages and 0.04 per cent from other alcohol products, representing a decrease of 4.36 per cent over 2001.
The department also assesses the taxable values of motor vehicles under the Motor Vehicles (First Registration Tax) Ordinance for the purpose of levying first registration tax. In 2002, the department registered a total of 50 motor traders and assessed the provisional taxable value on 44 778 vehicles.
Revenue Control
Dutiable commodities in Hong Kong are stored in warehouses licensed by the department after import or local manufacture. Removal of dutiable commodities is subject to a permit being issued by the department, and the commodities can only be released for local consumption upon payment of duty.
Currently, the bonded warehouses for dutiable liquor and tobacco operate under the physical supervision of the department. Oil companies and breweries already operate without physical supervision. To introduce a more flexible business environment for the warehouse operators and to reduce the cost of control and compliance, the Government proposes to replace the physical supervision requirement with an open bond system, which is based on risk management strategies including stricter licensing criteria, random checking, documentary verification and post-transaction auditing. The proposal has the general support of the trade, and the necessary legislative proposals were introduced into the Legislative Council in January. In April, familiarisation programmes were organised to explain to warehouse staff the expected changes under the open bond system. Subject to passage of the legislative proposals, it is intended to put the open bond system into full operation in 2003.
Revenue Protection
The department continued its vigorous enforcement action against cigarette smuggling in 2002. Contraband cigarettes are commonly smuggled into Hong Kong from the Mainland, mainly by cross-boundary goods vehicles. Others are imported through sea cargoes from Asian countries. During the year, about 181 million sticks of cigarettes were seized, a decrease of 46.7 per cent compared with 2001.
Marked oil (commonly known as 'red oil'), detreated marked oil and synthetic petrol continued to be used illegally as fuel for vehicles. To tackle this problem of illicit fuel, in addition to enforcement action taken at sea and land boundaries, sustained operations were mounted to eliminate illegal filling stations, illicit oil detreating plants and synthetic petrol manufactories. Surprise checks were also conducted to detect the use of illicit fuel in road vehicles.
With amendments made to the Dutiable Commodities Ordinance in 2000, a number of measures to further suppress the illicit use of fuel have been in effect since July 28 that year. The penalty for use of marked oil as vehicular fuel was raised from $200,000 to $1,000,000. Repeat offenders are also subject to disqualification from driving. The presumption provision was expanded to the effect that fuel transferred to or from a
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