The Revenue Bill 2003, which seeks to implement the proposals on motor vehicles first registration tax (FRT) announced in the 2003-04 Budget, was passed into legislation today (June 25).
In accordance with the newly enacted Ordinance, the system of FRT on private cars will be changed from the previous, pre-Budget global tax system to a marginal system; the tax bands will be widened (viz from four bands of less than $100,000, between $100,001 and $200,000; between $200,001 and $300,000; and above $300,000 to four marginal bands of first $150,000, next $150,000, next $200,000 and above $500,000), and the rates will be amended (viz from global rates of 40%, 45%, 50% and 60% to marginal rates of 35%, 65%, 85% and 100%). The tax rate for motorcycles will be amended from 40% to 35%.
The tax rates on private cars and motorcycles under the Ordinance are lower than the Administration's original proposal announced in the 2003-04 Budget which took effect from 2:30 p.m. on March 5, 2003 through the Public Revenue Protection (Revenue) Order 2003 (the PRPO).
Having reflected upon the views expressed by the motor trade and Members at the Bills Committee meeting, the Administration has decided to put forward a new proposal which strikes the most appropriate balance between the impact on the motor trade and the need to raise revenue from those who can afford it to help improve the budget deficit situation.
"We believe that the present adjustments to FRT rates, which will not unduly affect the motor trade's business, should be in the overall interest of the community," the Secretary for Financial Services and the Treasury, Mr Frederick Ma said during the Second Reading Debate of the Revenue Bill 2003.
While the abolition of exemptions will also apply to commercial vehicles, these vehicles will benefit from a reduction in their FRT rates.
The Government estimates that it will be able to raise an additional $350 million in recurrent revenue in a full year by implementing the proposals. This will help alleviate the budget deficit.
The Revenue Ordinance 2003, including the new tax rates, will take effect on June 27, 2003.
The Government will arrange for refunds to owners of private cars and motorcycles who have paid first registration tax calculated according to the rates stipulated in the PRPO. The amount of the refund will be equivalent to the difference in tax liability between the PRPO and the Revenue Ordinance 2003. Details will shortly be announced by the Transport Department.
End/Wednesday, June 25, 2003