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The Economy
Under the Dutiable Commodities Ordinance, excise duties are levied on only four types of commodities to be consumed locally (hydrocarbon oil, liquor, methyl alcohol and tobacco), irrespective of whether they are manufactured locally or imported. The Customs and Excise Department collects these duties, which totalled $7.72 billion in 2011-12 (about 2 per cent of total government revenue).
The Rating and Valuation Department is responsible for the billing and collection of rates, which are levied on landed properties at a specified percentage of their rateable values. The rates percentage charge in 2012-13 was 5 per cent. The rateable value of a property is an estimate of its annual open market rent at a designated date. Rateable values are reviewed each year to better reflect prevailing market rents. The current Valuation List took effect on 1 April 2012, with rateable values reflecting the rental values on 1 October 2011. The Valuation List contained about 2.4 million assessments on 31 March 2012. The revenue from rates in 2011-12 was $9.7 billion, accounting for about 2.2 per cent of total government revenue.
To help ease the pressure of the economic downturn on the community, the Government waived rates for 2012-13, subject to a ceiling of $2,500 per quarter for each rateable property. As a result, about 90 per cent of properties were subject to no rates in the year, while the rates payable for the remaining 10 per cent of properties were reduced by the full concession amount of $2,500, costing the Government about $11.7 billion.
The Rating and Valuation Department is also responsible for the billing and collection of Government rent for properties held under land leases granted on or after 27 May 1985, or on the extension of non-renewable land leases. Government rent is levied at 3 per cent of the rateable value of the property and is adjusted in step with any subsequent changes in the rateable value. There were about 1.8 million assessments in the Government Rent Roll on 31 March 2012. Total Government rent collected in 2011-12 was $6.5 billion, or about 1.5 per cent of total government revenue.
Fees and charges for services provided by government departments generated about $13.2 billion, or about 3 per cent of total revenue, in 2011-12. It is government policy that fees should in general be set at levels sufficient to recover the full cost of providing the services. Certain essential services are, however, subsidised by the Government or provided free of charge. Government-operated public utilities generated about $3.6 billion, which accounted for about 1 per cent of total revenue; the most important of these, in revenue terms, is provision of water supplies.
The Government also collected $37.2 billion from investments and interest income on its fiscal reserves in 2011-12, amounting to about 9 per cent of the total government revenue.
Lastly, some $84.6 billion, or about 19 per cent of the total government revenue in 2011-12, was generated from land transactions. All revenue from land transactions is credited to the Capital Works Reserve Fund to help finance the Public Works Programme.
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