The following is the speech by the Secretary for the Treasury, Miss Denise Yue, in moving the second reading of the Revenue (No.2) Bill 2000 in the Legislative Council today (April 5):
I move that the Revenue (No.2) Bill 2000 be read a second time.
This Bill seeks to give effect to two of the three revenue concession proposals in the 2000-01 Budget announced by the Financial Secretary last month. The two proposals are an extension of the concessionary diesel duty rate of $2 per litre for another nine months to 31 December 2000; and an extension of the exemption of electric vehicles from First Registration Tax for another three years to 31 March 2003. These proposals have already taken effect from the beginning of this month under a Public Revenue Protection Order made by the Chief Executive, in order to ensure that they could come into effect immediately after the existing concessions under the relevant legislation expired on 31 March 2000.
Let me briefly explain the reasons for these two proposals. With regard to the concession on diesel duty, the temporary reduction in diesel duty from $2.89 to $2 per litre was introduced in June 1998 as part of a special economic relief package to alleviate the burden of the community at a time of economic recession triggered by the Asian financial turmoil, as evidenced by a negative 2.6% growth of our Gross Domestic Product in the first quarter of 1998. When the Financial Secretary announced the 1999 Budget, the overall economic situation had stabilised but remained generally sluggish, with the GDP growth registering a negative 5.6% in the last quarter of 1998 and a negative 3.0% in the first quarter of 1999. The Financial Secretary therefore decided to extend this diesel duty concession for another year along with other relief measures such as tax and rates rebates.
Entering into the new Millennium, our economy has been rebounding strongly. We achieved a remarkable GDP growth of 8.7% in the fourth quarter of 1999, while the growth for the whole year is estimated at 2.9%. For 2000, we expect our economy to grow by 5%. There is general consensus that Hong Kong has started to recover from the most difficult time in our economic history. And in order to facilitate a quicker economic recovery, the Financial Secretary has proposed in this year's Budget to extend the temporary concession on diesel duty for another nine months to 31 December 2000, after which the duty will revert to $2.89 per litre.
Not surprisingly, some quarters of the transport industry consider the proposed 9-month concession extension to be inadequate, and want the concession to be extended to 12 months. The Member in this Council representing their interests also made this point at last week's Budget debate. While I can understand their sentiments, I wish to reiterate to this Council and the transport industry that the diesel duty concession is a temporary measure to provide relief during an extraordinary time of economic recession. By the end of 2000, we expect the economy to have substantially improved so that there should be no longer any grounds for continuing with the concession.
With regard to the proposal to extend the First Registration Tax exemption for electric vehicles, the exemption was first granted in 1994-95 and then extended in 1997-98. In the hope of further encouraging the use and development of this environmentally-friendly type of vehicles as part of our overall efforts in improving air quality, the Financial Secretary has proposed to extend the First Registration Tax exemption for another three years to March 31, 2003.
President, with these remarks, I commend the Bill to Members.
End/Wednesday, April 5, 2000