33. With regard to the office accommodation occupied by the Council's headquarters, parts of the 10th, 14th and 15th floors of the Harbour Centre were occupied in July 1983 by the headquarters of the Vocational Training Council, and by the Technical Education and Industrial Training Department of the Government. The Leasing Division of the ing and Valuation Department included the office accommodation occupied by the Council's headquarters in a scheme of Government-leased offices and it was therefore treated by the Rating Division of the department as exempt from rates. The Commissioner of Rating and Valuation has admitted that the Leasing Division did not inform the Rating Division who the occupiers of the premises were but has expressed doubt as to whether the Council was in rateable occupation of the premises since the tenancy was in the name of the Financial Secretary Incorporated and it was difficult to delineate the exact area of space occupied by the Council. The Commissioner has informed me that he is investigating the matter and if it is determined that the Council is in rateable occupation of any space, he will make arrangements with the Treasury to recover the amount due from the Council as from August 1983.
34. Whilst it may be argued that the delay or omission to assess the various premises to rates has not caused a loss of revenue because the Vocational Training Council is a fully subvented organization and the rates collected from the Council are reimbursed by the Government, there are consequential effects in that the Urban Council's rates revenue has suffered, there has been a hidden subsidy to the Vocational Training Council and any costings which the Vocational Training Council might have done would not have been properly based. The Commissioner of Rating and Valuation has informed me that he has taken appropriate action to strengthen his departmental procedures in order to prevent a recurrence of similar delays and omissions.
35. Non-assessment to rates of market stalls in the public markets of the Urban and Regional Councils. In paragraphs 15 to 20 of my previous report I referred to the delay in assessing public markets to rates under the Rating Ordinance resulting in an estimated loss to the revenue by way of rates forgone of $2.92 million for the years 1981-82 and 1982–83. Under Section 79A of the Public Health and Urban Services Ordinance the management and control of the public markets is vested in the Urban Council in respect of the urban areas and in the Regional Council in respect of the New Territories. Following my enquiries in June 1985, although legal advice had been obtained which confirmed that the market stalls in question were rateable, objections to the rating of the stalls on economic, political and administrative grounds were raised. Despite extensive discussions and correspondence these objections have not yet been resolved.
36. Reflecting the views of the Urban Council, the Director of Urban Services suggested that the Government should defer considering the assessment of public markets to rates until the subject could be examined in total perspective, with logical and circumspect interfacing of all the relevant policies and a full appreciation of the implications on key issues such as stall rental levels and increase in hawker licence fees. He expressed the view that rating should be a matter between the Government and individual market stall lessees so that the Urban Council should not have any responsibility for their payment or collection and that, until all the issues were logically resolved, an exercise on market stali rating was unlikely to be cost-effective and it was unlikely that market stall operators would accept an imposition of rates without seeking a commensurate reduction in stall rentals. The Secretary for Municipal Services and the Director of Regional Services generally agreed with these views, the Secretary stating that it would seem necessary to discuss a more definite programme for the introduction of rating stalls in both the Urban Council and Regional Council areas.
37. The Deputy Financial Secretary commented that although the legal position was that market stalls in the Urban and Regional Council markets were liable to rates, the Government's position could not be dictated only by the narrow legal view and had to take into account financial, political and practical considerations. The Deputy Financial Secretary's principal concern was the cost-effectiveness of rating the market stalls and he pointed out that on the basis of estimates made by the Commissioner of Rating and Valuation, the Government revenue would not show any gain until four to five years after the market stalls had been assessed to rates and the effect on the Urban and Regional Councils' revenue was likely to be minimal. The Deputy Financial Secretary concluded that any attempt to assess market stalls to rates could not be justified in terms of additional revenue and that there was no point in fixing a date from which market stalls would be assessed to rates until the Director of Urban Services had considered the assessment of market stalls to rates in the context of the current review of hawker and market policies.
38. The Commissioner for Rating and Valuation noted that the wholesale markets operated by the Fish Marketing Organization, the Vegetable Marketing Organization and the Hong Kong Housing Authority were all assessed to rates and saw no valid reason why those markets operated by the Urban and Regional Councils should be treated differently. He confirmed that his duties to assess tenements for rating purposes were not subject to administrative decisions or directions unless they were translated into legislation and that political considerations had no part in the administration of the Rating Ordinance. However the Commissioner has recently expressed the view that in the special circumstances of this case he must perforce agree with the Deputy Financial Secretary's policy decision that the assessment of market stalls be deferred until such time as a firm conclusion is reached on hawker and market policies, bearing in mind that the markets are liable to assessment and given sufficient prior notice will be assessed to rates.
39. Whilst noting the views of the departments and policy branches concerned, I have opined that the rating of market stalls is ultimately a cost-effective exercise and the earlier the rating exercise is carried out, the quicker the net gains estimated at $1.4 million a year would accrue to the Government and that any delay in rating market stalls would result in a loss to the Government revenue because of the limitation imposed by Section 29(1) of the Rating Ordinance.
40. It is for consideration therefore whether any further delay in assessing the public markets to rates is acceptable. Similar considerations apply to market stalls in the temporary wholesale markets of the Agriculture and Fisheries Department referred to below.
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