ENG-1996 — Page 104

THE ECONOMY

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the government received about $47 billion in profits tax, or about 26 per cent of total

revenue.

Salaries tax is charged on emoluments arising in, or derived from, Hong Kong. The basis of assessment and method of payment are similar to the system for profits tax. Tax payable is calculated on a sliding scale which in 1996 progressed from 2 per cent on the first segment of net income (that is, income after deduction of allowances) of $20,000, to 9 per cent and 17 per cent on the second and third segments of $30,000 each, respectively, and then to 20 per cent on the remaining net income. No one, however, pays more than 15 per cent of total income. The earnings of husbands and wives are reported and assessed separately. However, where either spouse has allowances that exceed his or her income, or when separate assessments would result in an increase in salaries tax payable by the couple, they may elect to be assessed jointly. Salaries tax contributed some $26 billion, or about 15 per cent of total revenue, in 1995-96. Due to generous personal allowances under Hong Kong tax law, about 53 per cent of the territory's workforce has no salaries tax liability at all.

Owners of land or buildings in Hong Kong are charged property tax at the standard rate of 15 per cent of the actual rent received, less an allowance of 20 per cent for repairs and maintenance. There is a system of provisional payment of tax similar to that for profits tax and salaries tax. Property owned by a corporation carrying on a business in Hong Kong is exempt from property tax (but profits derived from ownership are chargeable to profits tax). Receipts from property tax totalled about $1.6 billion in 1995-96.

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. The revenue from stamp duties accounted for about 6 per cent of total revenue, or about $11 billion, in 1995–96.

A duty is imposed on bets at the Hong Kong Jockey Club and on the proceeds of Mark Six lotteries -the only legal forms of betting in Hong Kong. The rate of duty is 12 per cent or 18 per cent of the amount of the bet (depending on the type of bet placed) and 20 per cent on the proceeds of lotteries. The yield in 1995-96 totalled some $11 billion, accounting for about 6 per cent of total revenue.

Estate duty is imposed on estates valued at over $6.5 million, at levels ranging from 6 per cent to a maximum of 18 per cent, while a hotel accommodation tax of 5 per cent is imposed on expenditure on accommodation by guests in hotels and guest- houses.

The Customs and Excise Department collects and protects duty revenue. The Dutiable Commodities Ordinance imposes controls on the import, export, manufacture, sale and storage of dutiable items. Duties are levied on four categories of commodities - hydrocarbon oil, alcoholic beverages, methyl alcohol and tobacco. Duties are imposed irrespective of whether the product concerned is locally manufactured or imported. There is no discrimination on the grounds of geographic origin. In 1995-96, $7.9 billion was collected in duties, accounting for about 4 per cent of total revenue.

The Rating and Valuation Department is responsible for the assessment and billing of rates, which are levied on landed properties at a fixed percentage of their rateable value. The revenue raised helps to finance the various public services provided by the