ENG-1997 — Page 107

THE ECONOMY

were renewed on June 28, 1997. The rent is equivalent to 3 per cent of the rateable value of the lot and is adjusted in step with changes in the rateable value. The Rating and Valuation Department is also responsible for the billing and collection of government rent.

The government derives significant amounts of revenue from other sources. Fees and charges for services provided by government departments generated about $10.8 billion, or about 5 per cent of total revenue, in 1996-97. It is government policy that fees should in general be set at levels sufficient to recover the full cost of providing the services. Certain essential services are, however, subsidised by the government or provided free.

Also, in 1996-97, the government collected $9.3 billion, amounting to about 5 per cent of the total revenue, from investments and rents from government properties. A further $6.6 billion was generated by government-operated public utilities, accounting for about 3 per cent of the total revenue. The most important of these, in revenue terms, are waterworks and the airport.

Lastly, some $27 billion, or about 13 per cent of the total revenue in 1996–97, was generated from land transactions. In accordance with Annex III to the Sino-British Joint Declaration, revenue from land transactions decided upon before the coming into force of the Joint Declaration, and from those conferring a benefit that expired on or before June 30, 1997, was credited to the General Revenue Account. This amounted to $451 million in 1996–97. All revenue from other land transactions was credited to the Suspense Account of the Capital Works Reserve Fund for sharing with the HKSAR Government Land Fund. The sharing arrangements in 1996-97 and in the first quarter of 1997-98, i.e. up to June 30, 1997, resulted in the transfer of $71 billion to the Works Account of the Capital Works Reserve Fund and a total of $65 billion to the HKSAR Government's Land Fund. Since July 1, 1997, the government receives revenue from land transactions in full.

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