ENG-2007 — Page 104

64 | The Economy

The rateable value of a property is an estimate of its annual rent in the open market as at a designated date. Revaluation of rateable values is conducted annually. to better reflect prevailing market rents. The current Valuation List took effect on April 1, 2007, with rateable values reflecting the rental values on October 1, 2006.

The Valuation List of March 31, 2007 contained about 2.3 million assessments. In 2006-07, the revenue from rates was $15.5 billion, accounting for about 5 per cent of total revenue.

As a result of the improvement of the Government's financial position, rates concession was given to all ratepayers to offset the rates payable for the April to June and July to September quarters of 2007 as well as the January to March quarter of 2008, subject to a ceiling of $5,000 per quarter for each rateable tenement. About 97 per cent of ratepayers were not required to pay any rates, while the remaining 3 per cent of ratepayers had their rates bills reduced by the full concession amount of $5,000. Government revenue was reduced by approximately $7.8 billion as a result of the rates concession.

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 1.7 million assessments in the Government Rent Roll on March 31, 2007. Total government rent collected in 2006-07 was $5.7 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 $11.7 billion, or about 4 per cent of total revenue, in 2006-07. 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 $3.3 billion, which accounted for about 1 per cent of total revenue; the most important of these, in revenue terms, is water charges.

The Government also collected $29.4 billion from investments and interest income on the fiscal reserves in 2006-07, amounting to about 10.2 per cent of the total revenue.

Lastly, some $37 billion, or about 12.8 per cent of the total revenue in 2006-07, 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.