ENG-1977 — Page 62

FINANCIAL STRUCTURE

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Estate Duty is imposed on that part of a deceased person's estate situated in Hong Kong. The rates of duty charged range from a minimum of seven per cent on estates valued between $400,000 and $500,000 to 18 per cent on those in excess of $3 million. Estates valued at less than $400,000 are exempt from duty. The yield for the year ended March 31, 1978, is estimated at $88 million.

Stamp Duty imposes fixed duties on certain classes of documents and ad valorem duties on others. The estimated yield from Stamp Duty for the year ended March 31, 1978, is $445 million.

Entertainments Tax is imposed on the price of admissions to race meetings and cinemas at rates varying with the amount charged for admission. This averaged about per cent in the case of race meetings and eight per cent in the case of cinemas. The estimated yield for 1977-8 is $24 million.

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Betting Duty is imposed on bets made on authorised totalisators or pari-mutuels, on proceeds of lotteries conducted by the Hong Kong Lotteries Board and on contri- butions towards authorised cash sweeps. The rate of duty is charged at either 74 per cent or 11 per cent, depending on the type of bet placed, and at 25 per cent on cash sweep contributions and proceeds of lotteries. The duty on bets and sweeps is recovered from the Royal Hong Kong Jockey Club, which holds the monopoly for conducting such operations, including a limited form of off-course betting. The estimated yield for the year ending March 31, 1978, is $275 million.

Hotel Accommodation Tax is imposed on hotel and guest house accommodation and is levied at the rate of four per cent on the accommodation charges paid by guests. For the 1977-8 financial year, this tax is estimated to yield $18 million.

Business Registration is compulsory for every company incorporated in Hong Kong, every overseas company with a place of business in Hong Kong and every business operating in Hong Kong, except those carried on by charitable institutions. The annual registration fee is $150, but exemption from payment of this fee is granted where the business is small. The total income from these fees, service charges for copies of documents and other fees for the 1977-8 fiscal year is expected to be $33 million.

Monetary System

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Bank notes are issued by three commercial banks the Hongkong and Shanghai Banking Corporation, the Chartered Bank and the Mercantile Bank. Coins of $5, $2, $1, 50 cents, 20 cents, 10 cents and five cents and currency notes of one cent denomina- tion are issued by the government. The second of a series of $1,000 gold coins to commemorate the Chinese Lunar New Year was issued early in 1977. The total currency in nominal circulation at the end of 1977 and details of its composition are shown in Appendix 11.

Although Hong Kong has no central bank and its bank notes are issued by com- mercial banks, they are backed by the Exchange Fund, a government account set up in 1935 when the Hong Kong dollar ceased to be based on silver. Apart from small authorised issues, which are limited to $95 million and are issued against securities of a kind approved by the Secretary of State and deposited to the order of the govern- ment, bank notes may only be issued against holdings of certificates of indebtedness, which are liabilities of the Exchange Fund. These certificates are non-interest-bearing