The Economy 69
The Housing Authority, operating through the Housing Department, is financially autonomous. The Government provides the Authority with capital and land on concessionary terms to finance the provision of public housing rental flat to those in need. Promoting home ownership is no longer one of the Authority's policy objectives and priorities. Against the repositioned policy of providing rental housing to low- income families, minimising market intervention and maintaining a fair and stable operating environment for the private property market, the Authority decided to terminate the Home Assistance Loan Scheme in July 2004.
A trading fund is an accounting entity enabling a department to provide services. on a commercial or quasi-commercial basis. Unlike a vote-funded department, a department operating on a trading fund is allowed to retain revenue generated to meet its expenditure and to finance future expansion.
Financial Results
Public expenditure in 2003-04 totalled $271.1 billion. The Government itself accounted for $243.2 billion. The growth rate over the preceding year was 2.9 per cent in nominal terms or 5.2 per cent in real terms. Some $60 billion, or 22.1 per cent of the public expenditure in 2003-04, was of a capital nature. An analysis of expenditure by function is at Appendix 6, Table 6. The growth rate of public expenditure is compared with the rate of economic growth at Table 7.
Total government revenue in 2003-04 amounted to $207.3 billion. The consolidated cash deficit for the year was $40.1 billion. Details of revenue by source and of expenditure by component for 2003-04 and 2004-05 (Revised Estimate) are at Table 8.
The Government's consolidated account recorded a deficit of $40.1 billion in 2003-04. The accumulated balances at the end of 2003-04 stood at $275.3 billion. These balances form the Government's fiscal reserves and are available to meet any calls on its contingent liabilities and enable it to cope with any short-term fluctuations in expenditure relative to revenue.
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 evasion and minimising opportunities for tax avoidance. The major sources of revenue are profits tax (24 per cent) and salaries tax (13 per cent). Other significant sources include revenue from investment returns (7 per cent), utilities, fees and charges for services provided by the Government (6 per cent), land transactions (3 per cent), betting duty (6 per cent), rates (5 per cent), stamp duties (5 per cent) and duties on dutiable. commodities (3 per cent). (For major sources of revenue, see Appendix 6, Chart 2)
The Inland Revenue Department collects about 50 per cent of total revenue, including profits tax, salaries tax, property tax, stamp duty, betting duty, estate duty and hotel accommodation tax. Profits, salaries and property taxes, (including tax under personal assessment), which together accounted for about 39 per cent of total revenue in 2003-04, are levied under the Inland Revenue Ordinance. Persons liable to