ENG-1995 — Page 97

THE ECONOMY

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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 1994–95, $7.6 billion was collected in duties, accounting for about four per cent of total revenue. Duties are levied on four groups of commodities hydrocarbon oil, alcoholic beverages, methyl

alcohol and tobacco.

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Duties are imposed irrespective of whether the product concerned is locally manu- factured or imported. There is no discrimination on the grounds of geographic origin. The Rating and Valuation Department is responsible for assessing and billing of 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 by the Legislative Council in accordance with the financial requirements of the government, the Urban Council and the Regional Council. For 1995-96, the percentage charge was fixed at 5.5 per cent. A rates relief mechanism cushions ratepayers from the effects of the increases in rateable values following the general revaluation which came into effect on April-1, 1994. The mechanism restricts the increases in rates payable in 1995–96 to 20 per cent of the amount paid for the same premises in 1994-95.

In 1994–95, the number of assessments in the Valuation Lists at the year-end stood at about 1 393 000, and the total net revenue from rates was $12.7 billion. Of this amount, $4.6 billion, collected from Hong Kong Island and Kowloon, was credited to the Urban Council and $3 billion, collected from the New Territories, went to the Regional Council. The remainder, amounting to $5.1 billion, was credited to the government's General Revenue Account, accounting for about three per cent of the total revenue.

The government derives significant amounts of revenue from other sources. Fees and charges for services provided by government departments generated a total of about $9.6 billion in 1994–95. 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 $8.4 billion was generated by government-operated public utilities, accounting for about five per cent of the total revenue. 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 $4.7 billion in 1994–95, was collected by the Commissioner for Transport.

In addition, some $19.1 billion, or about 11 per cent of the total revenue of the year, was generated by land sales. Since implementation of Annex III of the Joint