ENG-1991 — Page 88

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THE ECONOMY

The Housing Authority, operating through the Housing Department, is also financially autonomous. Its income is derived mainly from rents. If the authority's cash flow is inadequate to meet the construction costs of new estates, it may request an injection of capital by the government. The authority is provided with land on concessionary terms for the construction of public rental housing. Part of the authority's recurrent expenditure, for such activities as clearances and squatter control, is financed from the General Revenue Account. The authority is also responsible for carrying out a programme of squatter area improvements which are funded from the Capital Works Reserve Fund.

Revenue Sources

Duties are levied on six groups of commodities - hydrocarbon oils, alcoholic liquor, methyl alcohol, tobacco, non-alcoholic beverages and cosmetics. The Customs and Excise Department is responsible for collecting and protecting duty revenue. The Dutiable Commodities Ordinance imposes controls on the import, export, manufacture, sale and storage of dutiable items. In 1990–91, $5,729 million was collected in duties, compared with $4,628 million in 1989-90.

Specific duty rates on alcoholic liquors range from $1.84 a litre on cider and perry to $66 a litre on brandy. In addition, duty is payable at the rate of 35 per cent of the value of spirits, champagne and sparkling wines, and 20 per cent of the value of still wines. On tobacco, duty rates range from $120 a kilogram on Chinese-prepared tobacco to $620 a - kilogram on cigars, while that on cigarettes is $480 per 1000 pieces. On motor fuels, the duty rate is $3.72 a litre for unleaded petrol and $4.17 for leaded petrol; and on diesel oil for road vehicles, it is $1.87 a litre. Duty is levied on methyl alcohol at a rate of $6.20 a litre, and on non-alcoholic beverages at $60 a hectolitre. On cosmetics, duty shall be payable at the rate of 30 per cent of the normal price of the cosmetics.

More details on Revenue from Duties are at Appendix 11.

Rates are one of Hong Kong's indirect taxes and are levied on landed property at a percentage of its rateable value. The revenue obtained in this way helps finance the various public services provided by the government, the Urban Council and Regional Council.

Rateable value is an estimate of the annual rent at which a property might be expected to let as at a designated date, and general revaluations are conducted at intervals to keep rateable values up to date. The current lists of rateable values came into force on April 1, 1991 and reflect rental values at July 1, 1990.

The percentage charge is fixed annually by the Legislative Council in accordance with the financial requirements of the government, the Urban Council and the Regional Council. For 1991-2, the percentage charge has been fixed at 5.5 per cent. A rates relief mechanism is currently in place to cushion the effects on ratepayers of the increases in rateable values following the general revaluation which came into effect on April 1, 1991. The mechanism restricts the increases in rates payable in 1991-2 to 25 per cent of the amount paid for the same premises in 1990-91.

Rates are payable quarterly, in advance. Exemptions are few although the government generally provides financial assistance towards payment of rates to non-profit-making educational, charitable and welfare organisations, if their premises are being run in accordance with approved guidelines. No refunds of rates are allowed for vacant domestic properties, but half the rates paid may be refunded in the case of unoccupied non-domestic properties.