9. The appropriateness of the legal provision for the fees from the hire of police officers to be credited to the Police Welfare Fund was questioned on a number of occasions, over many years, on the principle that if the cost of oviding a service was charged to the general revenue then the fees collected in payment for such services should also be dited to the general revenue. The matter was last discussed in 1968 and 1969 between the Deputy Financial Secretary and the Commissioner of Police and a proposal was made that fees from the hire of police officers should be credited to the general revenue and that the Legislative Council should instead vote an annual grant to the Police Welfare Fund. This proposal was accepted reluctantly by the Commissioner of Police on the understanding that the grant voted would provide the same level of income as received from the hire of police officers over the previous few years. Unfortunately, the proposal was not pursued and meanwhile the fees credited to the Police Welfare Fund from the hire of police officers have risen from $230,000 in 1967–68 to $2.8 million in 1983-84, which in real terms represents a threefold increase. The Commissioner of Police, in his recent response to the Secretary for Security, has expressed his concern that if the Police Welfare Fund depended on an annual grant voted by the Legislative Council it would stifle the growth of welfare benefits which often depended upon opportunity and initiative rather than a predicted planned course of action.
10. Similarly, the appropriateness of the legal provision, for crediting the fees paid for the services rendered by members of the Fire Services Department engaged in special duties, to the Fire Services Department Welfare Fund, was raised in 1971 when the Solicitor General was requested to give an opinion on whether training courses given by members of the Fire Services Department specifically to members of the public were special duties for the purposes of the Ordinance. The Solicitor General, in giving his opinion, acknowledged that there had been ambiguity in the interpretation of special duty in the Ordinance but he concluded that the training courses in question were special duties and that the fees raised for such services had to be credited to the welfare fund. However, he made a plea for a review of the policy and a change in the law. He said that provision was made in the Ordinance for the welfare fund to be supplied from appropriation out of general revenue voted by the Legislative Council each year and that it seemed quite wrong that this fund should have to rely on fees charged for services performed, where these services were so closely bound up with the functions and the responsibilities of the Fire Services Department. He was firmly of the opinion that all services rendered by the Fire Services Department should be either statutory and provided free or contractual and paid for. If contractual, the financial benefit should accrue to the general revenue whilst the welfare fund should be properly endowed out of the general revenue without regard to the amount of money that the Government might make from selling these services to the public. The Solicitor General applied these remarks also to police contractual services but his recommendation was never followed up and the policy review did not take place. Meanwhile the Fire Services Department Welfare Fund's income from training course fees has increased from $80,000 in 1971-72 to nearly $1.4 million in 1983-84.
11.
Both the Commissioner of Police and the Director of Fire Services have expressed their concern that any policy change that would result in the welfare funds being deprived of the fees collected for the provision of contractual services would have an adverse effect on morale. However, the Deputy Financial Secretary shares my concern that fees charged for providing training courses to members of the public should form a substantial part of the income of the Fire Services Department Welfare Fund and would welcome a review of the policy. He also regrets that the policy issue concerning the fee income from the hire of police officers was not pursued after 1969 but he is reserving further comments until the matter has been considered by the Secretary for Security.
12.
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Head 1 – Duties. Subhead 050. Imported tobacco. The Dutiable Commodities Ordinance provides for the refund of duty, known as drawback, on duty-paid tobacco which is used in the manufacture of cigarettes exported from Hong Kong. The Dutiable Commodities Regulations stipulate that the amount of drawback shall in no case exceed the duty paid on the tobacco which is assessed on the weight of the tobacco. Drawback totalling $983 million was paid on exported cigarettes in 1984–85. In order to satisfy himself that the drawback does not exceed the duty paid, the Commissioner of Customs and Excise has arrangements with the Government Chemist for the declared weights of tobacco in export consignments to be checked on a sample basis, samples being taken from every export consignment. Should the actual weight in the sample fall short of the declared weight then the declared weight of that entire consignment will be adjusted for the purpose of calculating the drawback. The procedures require the Government Chemist to carry out routine checks to verify the gross weight of the cigarettes in all samples but in order to ensure that the tobacco weight is not overstated by the understatement of the non-tobacco components, such as paper and filter tips, samples from certain export consignments are selected for detailed analysis in accordance with laid down criteria.
13. In a recent audit review of the drawback payments made by the Commissioner of Customs and Excise I have drawn attention to certain weaknesses in the system that may have resulted in the overpayment of drawback. Firstly, the criteria for selecting the samples for detailed analysis were not set out in a consolidated form so as to provide a ready reference for the Customs and Excise Department staff. Consequently, some of the detailed analysis checks were found to have been overlooked. Secondly, no action was taken to increase the number of detailed analysis checks on those manufacturers who were found to persistently understate the weight of the non-tobacco components, nor to warn those concerned. For example, I noted during my review two cases of a manufacturer persistently understating the weights of paper and filter tips in cigarette export consignments which caused, in my estimation, overpayments of drawback amounting to $3 million in 1984–85. As a result of these weaknesses I was not satisfied that the system adequately ensured that the drawback on exported cigarettes did not exceed the duty paid.
14. The Commissioner of Customs and Excise has agreed to issue to his staff a set of consolidated guidelines on selecting samples for detailed analysis together with simplified and improved procedures for checking them but has
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