ENG-1998 — Page 98

THE ECONOMY

segments of net income (that is, income after deduction of allowances) of $35,000 each, respectively, and then to 17 per cent on the remaining net income. No one, however, needs to pay more than 15 per cent of his or her 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 $30.2 billion, or about 11 per cent of total revenue, in 1997-98. Due to generous personal allowances under Hong Kong tax law, about 56 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 1997-98 .

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 11 per cent of total revenue, or about $29.1 billion, in 1997–98.

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 1997-98 totalled some $13.5 billion, and accounted for about 5 per cent of total revenue.

Estate duty is imposed on estates valued at over $7.5 million, at levels ranging from 5 per cent to a maximum of 15 per cent, while a hotel accommodation tax of 3 per cent is imposed on expenditure on accommodation by guests in hotels and guest- houses.

Under the Dutiable Commodities Ordinance, duties are levied on only four types of commodities hydrocarbon oil, alcoholic beverages, other alcohol products (i.e. methyl and ethyl alcohol) and tobacco. The Customs and Excise Department collects duties on these products irrespective of their geographical origin. In 1997–98, the department collected duties worth $8.5 billion or about 3 per cent of total revenue. The Rating and Valuation Department is responsible for the billing and collection of rates, which are levied on landed properties at a fixed percentage of their rateable value. In 1998-99, the overall rates percentage charge is 4.5 per cent. The revenue raised helps to finance the various public services provided by the provisional municipal councils, and provides a stable and reliable revenue stream for the government.

The Rating and Valuation Department is also responsible for the assessment of rateable value which 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 regular intervals to keep rateable values of properties up-to-date. The current Valuation Lists took effect on April 1, 1997 and the rateable values reflect rental values at July 1, 1996.