Revenue Bills to be introduced into the Legislative Council

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The Government will shortly introduce into the Legislative Council three separate composite Bills, namely Revenue Bill 2001, Revenue (No.2) Bill 2001, and Revenue (No.3) Bill 2001, which seek to give effect to the revenue proposals announced by the Financial Secretary in the 2001-02 Budget.

The Revenue Bill 2001 comprises three revenue-raising proposals which came into effect from 2:30 p.m. on 7 March under the Public Revenue Protection (Revenue) Order 2001 ("the Order"). They are:

(a) increase tobacco duty by 5%;

(b) increase duty on alcoholic beverages with alcoholic content below 30%, from 30% to 40%; and

"As the Order has only given provisional legal effect to these three proposals for revenue protection purpose, and the Order will expire on 7 July (four months after its commencement) if the relevant revenue legislation is not enacted by then, we need to formally introduce a Bill containing the same proposals into the Legislative Council in the normal way, " a Government spokesman said.

The Revenue (No.2) Bill 2001 comprises the following three revenue proposals which can take effect after the relevant legislative amendments have been passed by the Legislative Council:

(a) increase the maximum level of deduction of self-education expenses from $30,000 to $40,000 a year;

(b) increase the Air Passenger Departure Tax from the existing $50 to $80, and extend its scope to include all helicopter passengers; and

"The proposal to increase the maximum deduction for self-education expenses under salaries tax aims at encouraging life-long learning. The revenue-raising proposals are but modest adjustments to just a handful of revenue items, which will neither impact adversely on economic recovery nor the basic livelihood of the community. They are nevertheless necessary for achieving a balanced Budget over the medium term, in the face of our overall deficits in 2000-01 and 2001-02," the spokesman explained.

The Revenue (No.3) Bill 2001 comprises the proposal to reduce the Stamp Duty on stock transactions from 0.225% to 0.2% per round transaction, and the related proposal to increase the levy on securities transactions by 0.002 percentage point in order to build up the new Investor Compensation Fund.

"These two proposals are put in a separate composite bill since both aim at enhancing the competitiveness of Hong Kong's financial markets. Taken together, they would lower the transaction costs on stock trading and increase protection to investors. Subject to the passage of the Revenue (No.3) Bill in the Legislative Council, we plan to implement both proposals concurrently in July 2001," the spokesman said.

The Bill also seeks to remove the portion of levy currently payable to the Stock Exchange of Hong Kong under the Securities and Futures Commission Ordinance. The Stock Exchange has proposed to introduce a trading fee which will be subject to the approval of the Securities and Futures Commission.

The three Revenue Bills 2001 will be gazetted on Friday, 6 April, and be introduced into the Legislative Council on Wednesday, 25 April.

End/Wednesday, April 4, 2001

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