ENG-2006 — Page 92

64 The Economy

In 2005-06, a hotel accommodation tax of 3 per cent was imposed on expenditure on accommodation by guests in hotels and guesthouses.

Under the Dutiable Commodities Ordinance, duties are levied on only four types of commodities - hydrocarbon oil, liquor, methyl alcohol and tobacco, irrespective of whether they are manufactured locally or imported. The Customs and Excise Department is responsible for collecting these duties. In 2005-06, the department collected duties of $6.4 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 specified percentage of their rateable values. In 2006-07, the rates percentage charge was 5 per cent.

The rateable value of a property is an estimate of its annual rent in the open market at a designated date. In order to better reflect prevailing market rents, revaluation of rateable values is conducted on an annual basis. The current Valuation List took effect on April 1, 2006, with rateable values reflecting the rental values in existence on October 1, 2005.

The Valuation List of March 31, 2006 contained about 2.25 million assessments. In 2005-06, the revenue from rates was $14.16 billion, or about 6 per cent of total

revenue.

The Rating and Valuation Department is also responsible for the billing and collection of government rent, which was payable from July 1, 1997, for land leases granted on or after May 27, 1985, and on the extension of non-renewable land leases. The latter group comprises all land leases in the New Territories and New Kowloon, that part of Kowloon north of Boundary Street, which were renewed on June 28, 1997. Government rent is levied at 3 per cent of the rateable value of the lot and is adjusted in step with any subsequent changes in the rateable value. There were about 1.69 million assessments in the Government Rent Roll on March 31, 2006. Total government rent collected in 2005-06 was $4.7 billion, or about 2 per cent of total revenue.

The Government derives significant amount of revenue from other sources. Fees and charges for services provided by government departments generated about $11.1 billion, or about 5 per cent of total revenue, in 2005-06. It is government policy that fees, in general, should 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 of charge. Government-operated public utilities generated about $3.4 billion, which accounted for about one per cent of total revenue; the most important of these, in revenue terms, is water charges.

The Government also collected $10.4 billion from investments and interest income on the fiscal reserves in 2005-06, amounting to about 4.2 per cent of the total revenue.

Lastly, some $29.5 billion, or about 11.9 per cent of total revenue in 2005-06, was generated from land transactions. All revenue from land transactions is credited to the Capital Works Reserve Fund to help finance the Public Works Programme.