ENG-1985 — Page 64

THE ECONOMY

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such activities as squatter control and the management of temporary housing areas. The authority is also responsible for carrying out a programme of squatter area improvements funded from the Capital Works Reserve Fund.

The statutory funds included in the public sector comprise the Capital Works Reserve Fund, the Development Loan Fund, the Home Ownership Fund, the Lotteries Fund, the Mass Transit Fund and the Student Loan Fund.

The Capital Works Reserve Fund finances the Public Works Programme and land acquisitions. With effect from the entry into force on May 27 of the Sino-British Joint Declaration, the fund was restructured to allow for implementation of Annex III to the Joint Declaration dealing with the accounting of premium income obtained from land transactions. The income of the fund is derived mainly from this source and from transfers from the General Revenue Account.

The Development Loan Fund is used mainly to finance social and economic develop- ments including, in particular, loans to the Housing Authority for the construction of public housing estates. Transfers are made from the General Revenue Account to the fund to meet the loan requirements of the Housing Authority. Otherwise the fund's income is derived from interest payments and capital repayments.

The Home Ownership Fund finances mainly the construction of flats for sale under the Home Ownership Scheme. The Housing Authority is the government's agent for the design, construction and marketing of these flats. The fund was initially established by a transfer from the General Revenue Account and derives its income from the proceeds of sales of the flats. The fund also finances the recurrent expenditure on the administration and planning of the Private Sector Participation Scheme.

The Lotteries Fund is used to finance the development of social welfare services through loans and grants. It derives its income mainly from a share of the proceeds of the Mark Six lotteries.

The Mass Transit Fund is used to finance the purchase of government equity in the Mass Transit Railway Corporation. Its income is derived entirely from transfers from the General Revenue Account.

The Student Loan Fund is used to finance loans to students at the two universities, the two polytechnics, the Baptist College and other approved post-secondary institutions, and to Hong Kong students studying in the United Kingdom. Transfers are made as necessary from the General Revenue Account to enable the fund to meet its commitments, the only other source of funds being loan repayments.

Revenue Sources

There is no general tariff on goods entering Hong Kong but duties are charged on six groups of commodities irrespective of whether they are imported or manufactured locally. These are alcoholic liquors, tobacco, certain hydrocarbon oils, methyl alcohol and, since February 1985, certain non-alcoholic beverages and cosmetics. All firms engaged in the import, export, manufacture, storage or sale of dutiable commodities must be licensed.

Since February 1984, duty is payable on European-type liquor, except beer, cider and perry, at the rate of 20 per cent of the c.i.f. value of liquor and, in addition, at the relevant specific duty rates. The specific duty rates on alcohol now range from $1.20 a litre for beer to $60 per litre on brandy. On tobacco, the rates range from $40 a kilogram on Chinese prepared tobacco to $210 a kilogram on cigarettes. On motor and aircraft spirits the duty is $2.20 a litre and on diesel oil for road vehicles $1.10 a litre. On methyl alcohol the duty is $4 a litre. On non-alcoholic beverages the duty is $60 a hectolitre. There is a 25 per cent ad