ENG-1994 — Page 100

THE ECONOMY

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The Rating and Valuation Department is responsible for assessing and collecting rates, which are levied on landed properties at a fixed percentage of their rateable value. The revenue raised helps finance the various public services provided by the government, the Urban Council and the Regional Council, as well as providing a stable and reliable revenue stream for the government.

The rateable value is an estimate of the annual rent at which a property might be expected to be 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, 1994, and reflect rental values at July 1, 1993.

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 1994-95, the percentage charge was fixed at 5.5 per cent. A rates relief mechanism is currently in place to cushion ratepayers from the effects of the increases in rateable values following the general revaluation which came into effect on April 1. The mechanism restricts the increases in rates payable in 1994-95 to 20 per cent of the amount paid for the same premises in 1993–94.

In 1993-94, the number of assessments in the Valuation Lists at the year-end stood at about 1 338 000, and the total net revenue from rates was $10.8 billion. Of this amount, $4.1 billion, collected from Hong Kong Island and Kowloon, was credited to the Urban Council and $2.2 billion, collected from the New Territories, went to the Regional Council. The remainder, amounting to $4.5 billion, was credited to the government's General Revenue Account.

The government derives significant amounts of revenue from a number of other sources. Fees and charges for services provided by government departments generated a total of about $8.6 billion in 1993–94. It is the government's general policy that fees charged should be set at a level to allow recovery of the full cost of providing the goods and services. Certain essential services are, however, subsidised by the government or provided free.

A further $8 billion was generated by government-operated public utilities. The most important of these, in revenue terms, are water supplies, postal services and the airport. Significant sums also accrued to general revenue from the tax imposed for the registration of motor vehicles under the Motor Vehicles (First Registration Tax) Ordinance. This revenue, amounting to approximately $4.2 billion in 1993–94, was collected by the Commissioner for Transport.

In addition, some $18.5 billion, or about 11 per cent of the total revenue of the year, was generated by land transactions. Following the implementation of Annex III of the Joint Declaration, revenue from land transactions decided upon before the coming into force of the Joint Declaration, and from those conferring a benefit that expires on or before June 30, 1997 (amounting to $264 million in 1993–94), is credited to the General Revenue Account. All revenue from other land transactions is credited to the suspense account of the Capital Works Reserve Fund, pending sharing with the future Hong Kong Special Administrative Region Government. The sharing arrangements in 1993–94 resulted in the transfer of $18.2 billion to the works account of the Capital Works Reserve Fund and $16.9 billion to the future Hong Kong Special Administrative Region Government's Land Fund.

A further $1.4 billion was received in the same year by way of royalties and concessions. These are paid by certain major companies holding franchises, such as the Cross Harbour