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The coming eight months will be a critical period for Hong Kong. The Hong Kong Government is fully committed to working towards a successful transition by continuing its effective and accountable administration, and through practical co- operation with the Preparatory Committee and the Chief Executive (Designate).

We believe that the Hong Kong community will also look to the Chief Executive (Designate) to fully implement the principles of "high degree of autonomy", "Hong Kong people ruling Hong Kong", and "one country, two systems" as stipulated in the Joint Declaration and the Basic Law, and lead Hong Kong towards a bright future.

End

Motor Vehicles (First Registration Tax) Bill 1996

Following is the speech by the Secretary for the Treasury, Mr K C Kwong, in moving the second reading of the Motor Vehicles (First Registration Tax) (Amendment) (No.2) Bill 1996 in the Legislative Council today (Wednesday):

Mr President,

I move that the Motor Vehicles (First Registration Tax) (Amendment) (No. 2) Bill 1996 be read the second time.

The Motor Vehicles (First Registration Tax) Ordinance provides the legislative framework within which the first registration tax system for motor vehicles operates. The current system was introduced in August 1994. We then undertook to review the operation of the system after its implementation. We have completed the review. Members may recall that in the context of the 1996-97 Budget, we introduced legislation to tackle the problem of over-declaration of the value of tax exempted items, i.e. exempted vehicle accessories and distributor's warranty, in order to manipulate the price structure of vehicles, thereby reducing the first registration tax payable. This is one of the main issues identified in the review. The legislation was passed by this Council and came into operation on 3 June 1996.

The Bill before Members today aims to deal with other issues identified in the review. It seeks to improve the operation of the first registration tax system, to facilitate trade operation, and to further reduce opportunities for tax evasion. However, no major change to the first registration tax policy has been proposed. Let me briefly explain the amendments.