ENG-1983 — Page 78

THE ECONOMY

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Interest tax is charged on interest arising in or derived from Hong Kong. This is basically a withholding tax deducted at source unless the interest forms part of the profits of a corporation carrying on a trade or business in Hong Kong, in which case it is subject to profits tax. The rate of interest tax on interest paid or payable after February 24, 1982, and before October 17, 1983, on deposits in Hong Kong currency placed with financial institutions carrying on business in Hong Kong was 10 per cent. The rate for all other chargeable interest is 15 per cent. Interest payable on foreign currency deposits placed with financial institutions carrying on business in Hong Kong is exempt from tax, as is interest paid or payable after October 16, 1983, on a deposit in Hong Kong currency placed with such financial institutions. Interest paid or payable by the government and public utilities is also exempt from tax, provided it does not exceed a specified rate, which varies according to the prevailing level of interest rates.

Other revenue arises from taxes on the registration of motor vehicles and departing air passengers, fines, forfeitures and penalties, royalties and concessions, yields from properties, investments and land transactions, reimbursements and contributions, govern- ment utilities, and from fees and charges for the provision of a wide range of goods and services.

Audit of Public Accounts

The audit of all the government's accounts is carried out by the Director of Audit. He also audits the accounts of the Urban Council, the Housing Authority and more than 50 statutory and non-statutory funds and other public bodies, as well as reviewing the financial aspect of the operations of the many government-subvented organisations working in Hong Kong. The director's appointment, tenure of office, duties and powers are set out in the Audit Ordinance, which also provides that he shall not be subject to the direction or control of any other person or authority.

The Director of Audit's report on the annual accounts of the government is submitted to the Governor as President of the Legislative Council. It is then referred to the Public Accounts Committee, comprising a chairman and six members, all of whom are unofficial members of the Legislative Council. In the exercise of its authority, the committee may call any public officer or other person concerned to give information and explanations and to produce any documents and records which it may require. The report by the Public Accounts Committee on the Director of Audit's report relating to the accounts of the government is tabled in the Legislative Council at the same time as the director's report. Both are copied to the Secretary of State.

The Economy in 1983

As the performance of the economies of several of Hong Kong's major export markets, especially the United States, improved in 1983, the Hong Kong economy experienced an export-led recovery. Preliminary estimates indicate that the growth rate in real terms of the gross domestic product (GDP) was 5.9 per cent, which was considerably higher than the 1.1 per cent recorded in 1982.

In contrast to the decreases experienced throughout 1982, the year-on-year growth rate of domestic exports in real terms accelerated to nine per cent in the first half and an estimated 19 per cent in the second half of 1983. Thus, the growth rate in real terms for 1983 as a whole was about 14 per cent. In particular, the growth rate of domestic exports to the largest market, the United States, improved considerably to about 26 per cent in real terms, compared with -1 per cent in 1982. The growth rates in real terms of domestic exports to