ENG-1985 — Page 65

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THE ECONOMY

valorem duty on the c.i.f. price for imported, or wholesale price for locally produced, cosmetics.

Rates are levied on the occupation of landed property at a percentage of the assessed rateable value which is, briefly, the annual rent at which the property might reasonably be expected to be let. New valuation lists are prepared periodically as directed by the Governor, enabling rateable values to be reviewed and updated in line with market rental levels. The current lists came into effect on April 1, 1984, with all rateable values determined by reference to rents as at July 1, 1983. For newly assessed premises, the rateable values are also based on rental levels as at this reference date.

The percentage charges on rateable values are determined annually by resolution of the Legislative Council. For 1985-6 the charge is 5.5 per cent. In the urban areas part of the rates charged is paid to the Urban Council, the remainder being credited to General Revenue, but in the New Territories all the rates are credited to General Revenue. It is intended that with effect from April 1986, the newly established Regional Council will obtain most of its revenue from rates charged in the New Territories.

To cushion the impact of the increase in rates on ratepayers following the revaluation, a relief scheme was introduced on April 1, 1984. Under this scheme, the maximum increase in the rates payable for any property in any year will not exceed a prescribed percentage of the amount payable in the preceding year. The percentage prescribed for the year 1985–6 is 20 per cent.

Rates are payable quarterly in advance and exemptions are few. However, the govern- ment generally provides financial assistance towards the payment of rates to non-profit- making educational, charitable and welfare organisations if the premises they occupy are being run in accordance with an approved target or policy. No refund of rates is allowed for vacant domestic premises but half of the rates paid may be refunded in the case of vacant non-domestic premises.

The taxes and duties making up the internal revenue, with the exception of the air passenger departure tax and the Cross-Harbour Tunnel passage tax, are collected by the Inland Revenue Department. These consist of betting duty, entertainments tax, estate duty, hotel accommodation tax, stamp duty and earnings and profits tax.

Betting duty is imposed on bets on authorised totalisators and the proceeds of Mark Six lotteries. The rate of duty is either 9.5 per cent or 16 per cent depending on the type of bet placed, and is 30 per cent on the proceeds of lotteries.

Entertainments tax is imposed on the price of admission to cinemas and race meetings at rates which vary with the prices charged for admission. This averages about nine per cent in the case of cinemas and 29 per cent in the case of race meetings.

Estate duty is imposed on that part of a deceased's estate situated in Hong Kong. The rates of duty charged range from a minimum of 10 per cent on estates valued between $2 million and $2.5 million to a maximum of 18 per cent on estates valued in excess of $4 million. Estates valued at less than $2 million are exempt from duty.

Hotel accommodation tax of five per cent is imposed on expenditure on accommodation by guests in hotels and guest-houses.

The Stamp Duty Ordinance imposes fixed and ad valorem duties on different classes of documents relating to assignments of immovable property, leases and share transfers.

Earnings and profits tax is levied under the Inland Revenue Ordinance. Hong Kong has a schedular system of taxation whereby persons liable are assessed and required to account for tax on four separate and distinct sources of income, namely business profits, salaries, income from property and interest income. Personal assessment is a form of aggregation