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LCQ18: Rates payable on domestic premises
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    Following is a question by the Hon Frederick Fung and a written reply by the Secretary for Financial Services and the Treasury, Mr Frederick Ma, in the Legislative Council today (December 6):

     Regarding rates of residential properties, will the Government inform this Council:

(a)  of the following statistics in each of the financial years 2005-2006 and 2006-2007 (Appendix 1):

(b)  whether it has studied if the existing arrangement of applying a rates charge of 5% across the board is in line with the "ability to pay" principle; if it has, whether it has made reference to the arrangements in other countries in the course of the study, and of the results of the study; if no study has been conducted, whether it will conduct such a study; and

(c)  whether it will consider studying the implementation of the proposal to introduce a progressive scale of rates charges (i.e. the rates charges will be progressively increased according to the monthly rateable values of residential properties); if it will, of the details; if not, the reasons for that?


Reply:

Madam President,

(a)  Because of addition and deletion of assessments, the number of residential properties liable to rates in a year varies from time to time.  As such, we only list out the number of properties according to their respective ranges of annual rateable values and their percentage shares in the total number of properties as at 1st of April 2005 and 2006.  The relevant statistics are shown in Appendix 2 and Appendix 3.

     Besides, the Rating and Valuation Department does not categorise the actual/estimated annual rates received according to the rateable values of properties.  As rates exemption or concessions may be granted to properties during a year, and the rates revenue in a particular year may include recovered rates and surcharge from previous years, it would be difficult to determine precisely what percentages of the total rates revenue in a year was contributed by properties of different rateable values respectively.

(b) and (c)  Under the existing system of levying rates by applying a flat rate on the rateable value of properties, the higher the rateable value of a property, the higher will be the amount of rates payable.  Therefore, the existing mechanism has already reflected the affordability of different rate payers.  This mechanism adheres to the principle of affordability and keeps our tax system simple.

     We from time to time review all kinds of taxes, including rates, to see how our taxation system could be further improved. In the course of that, we also take into account the practices in other jurisdictions. In considering any changes to the current system, we adhere to the principle of maintaining a simple and low tax regime.

Ends/Wednesday, December 6, 2006
Issued at HKT 12:49

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