ENG-1971 — Page 86

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FINANCIAL STRUCTURE

Substantial revenue accrues from Entertainments and Bets and Sweeps Taxes and is estimated at $82 million in 1971–2. Entertain- ments Tax is charged on the price of admission to cinemas and race meetings at which totalisator or parimutuel betting is conducted, the rate varies with the amount charged but averages about 22 per cent. Certain cinema shows given for philanthropic, charitable or educa- tional purposes may be exempt. Bets and Sweeps Tax imposes 71 per cent on totalisator receipts and 25 per cent on cash sweepstake receipts.

The Hotel Accommodation Tax, introduced in July 1966, provides money for the promotion of tourism. The rate of tax is two per cent of the charge made for accommodation by the proprietor of any hotel containing 10 or more rooms normally available for guests and where the rate of accommodation charge is $15 or more a day. This levy is estimated to yield $5 million in 1971–2.

Every business carried on in the Colony, except one which is not carried on for the purpose of gain or one which is carried on by a charitable institution, must be registered and pay an annual registration fee of $25. Where the business is very small, the Com- missioner may exempt it from payment. These fees are expected to yield approximately $4.4 million.

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CURRENCY

In the absence of a central bank, Hong Kong's currency notes are issued by three commercial banks, the Hongkong and Shanghai Banking Corporation, the Chartered Bank and the Mercantile Bank Limited. Coins of one dollar, 50 cents, 10 cents and five cents and notes of one cent denomination are issued by the Government. The total currency in nominal circulation at December 31, 1971

was:

Bank note issue

Government $1 coin issue

Subsidiary coins

***

Government 1 cent note issue

...

$2,741,631,000

$ 107,079,317 $ 82,853,433

$

545,240

The value of the currency issued by the note-issuing banks is regulated by an Exchange Fund, which was set up in 1935 when the Hong Kong dollar ceased to be based on silver. Briefly, the Fund receives sterling from these banks in exchange for Certificates of Indebtedness denominated in Hong Kong dollars. These Certifi- cates, which are non-interest-bearing and are issued and redeemed at the discretion of the Financial Secretary, provide the legal backing for the notes issued by the banks, apart from their small