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Following is a question by the Hon Tam Yiu-chung and a reply by the Secretary for Food and Health, Dr York Chow, in the Legislative Council today (June 24):
Question:
As the licence fees of food businesses in different districts are at present still determined in accordance with the fee levels set respectively by the former Provisional Urban Council and the former Provisional Regional Council, the annual licence fees of various types of food businesses in the New Territories (NT) exceed the fees concerned for the food businesses with premises of the same size on Hong Kong Island and in Kowloon by nearly 40% to 100%. In this connection, will the Government inform this Council whether:
(a) it had reviewed in the past three years the fee charging policies and fee levels for food business licences across the territory; if it had, of the outcome; and
(b) currently it has any plan to reduce the licence fees of various types of food businesses in NT to align them with those of food businesses on Hong Kong Island and in Kowloon, so as to enhance the fairness of the fee charging policies and reduce the operating costs of food businesses in NT; if so, of the details; if not, the reasons for that?
Reply:
President,
Under the existing legislation, operators of food premises are required to obtain food business licences from the Food and Environmental Hygiene Department (FEHD). These premises include restaurants, food factories, bakeries, frozen confection factories, siu mei and lo mei shops and fresh provision shops. Permits issued by FEHD are required for the sale of restricted foods including non-bottled drinks, Chinese herb tea, milk beverage, frozen confections, etc.
The overall fee levels of food business licences and permits are set on a full cost recovery basis.
Broadly speaking, there are currently three charging bases for food business licences. First, fee is charged according to the floor area of the premises. The larger the floor area, the higher the licence fee is. For premises such as restaurants, food factories, bakeries, frozen confection factories, milk factories and factory canteens, there are 19 bandings of licence fees based on the floor area of these premises. Using restaurants as an example, there are two types of licences, namely General Restaurant Licence and Light Refreshment Restaurant Licence. For the General Restaurant Licence, restaurants with floor area of 100 square metres or less to 200 square metres have to pay an annual licence fee of $2,520 to $9,050; restaurants with floor area over 200 square metres to 500 square metres have to pay an annual licence fee of $5,650 to $24,605; and restaurants with floor area over 500 square metres have to pay an annual licence fee of $13,860 to $258,870. For the Light Refreshment Restaurant Licence, restaurants with floor area of 100 square metres or less have to pay an annual licence fee of $1,810 to $3,690; restaurants with floor area over 100 square metres to 250 square metres have to pay an annual licence fee of $2,270 to $8,355; and restaurants with floor area over 250 square metres have to pay an annual licence fee of $4,960 to $185,250. As for cold stores, there are only 10 bandings, ranging from the smallest of 200 square metres or less to the largest of 5,000 square metres or more.
Secondly, fee is charged according to the number of types of commodities sold. For instance, the licence fee for fresh provision shops is charged according to the number of types of commodities (such as beef, pork, mutton, fish, poultry and reptile) for sale. That is, the licence fee will double for selling each additional commodity. However, a ceiling is set for such licence fee. The aggregate fee will not exceed the fee for four commodities even if the premises have permission to sell more than four commodities. Such licence fee ranges from $3,600 to $19,760.
Thirdly, fee is charged at a fixed rate irrespective of the floor area of the premises or the number of types of commodities sold. Fees of siu mei and lo mei shop licence as well as restricted food permit are charged on this basis. The licence fees of siu mei and lo mei shops are $2,790 for the urban area and $3,825 for the New Territories, while those of restricted food permit are $540 and $755 for the urban area and the New Territories respectively.
There are a total of about 26,000 premises holding food business licences or permits in Hong Kong, with about 60% of them located in the urban area and 40% in the New Territories.
The current fee levels for food business licences were determined by the former Provisional Urban Council and the former Provisional Regional Council on a full cost recovery basis. Costs included staff cost, transportation, accommodation and administration overhead expenses, etc. As the two former Provincial Municipal Councils, which operated separately, had different costing bases, there had always been some disparity of food business licence fee levels between the urban area and the New Territories.
In 1998, in the light of the economic environment at the time, the former Provisional Urban Council decided to adjust its licence fees downwards by 30%, while the former Provisional Regional Council chose to freeze its licence fees. Since then, the disparity in licence fee levels between the urban area and the New Territories has become greater. As the food business licence fees have remained frozen, the situation in which fees for the same types of food business licences in the New Territories are higher than those in the urban area persists.
We consider that the licence fees for food businesses in the urban area and the New Territories should be aligned in the long run. The FEHD has been exploring the relevant alignment options. As the licence fees for food businesses have remained frozen since 1998, should the licence fees for food businesses in the urban area and the New Territories be aligned, upward adjustments of varying degrees will probably be needed for the licence fees of all kinds of food businesses across the territory in accordance with the full cost recovery principle. As the fee levels of licences in the urban area have remained on the low side with the 30% reduction of food business licence fees in the urban area in 1998, there may be a larger upward adjustment to the licence fees of food businesses in the urban area in the event of alignment. However, in paying heed to principles when we consider the issue of licence fees, we should not overlook actual circumstances. In the light of the prevailing economic circumstances, licence fees of food and beverage businesses will be waived for one year as part of the new round of relief measures unveiled by the Financial Secretary on May 26 this year. We consider that it is not an opportune time to put forward the fee alignment proposal.
The licence fees of food businesses in the urban area and the New Territories should be aligned in the long run. We will assess the feasibility of the alignment of fees from various perspectives. While adhering to the cost recovery principle in the review and revision of the fees, we will also endeavour to take into consideration the affordability and acceptance of the business operators, with a view to minimising the potential impact brought about by the alignment of fees.
Ends/Wednesday, June 24, 2009
Issued at HKT 18:55
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