LC Paper No. LS 149/98-99
Paper for the House Committee Meeting
of the Legislative Council
on 16 April 1999
Legal Service Division Report on
Public Revenue Protection (Revenue) Order 1999 made under
section 2 of the Public Revenue Protection Ordinance (Cap. 120)
The Public Revenue Protection (Revenue) Order 1999 (L.N. 90 of 1999) ("the Order") was gazetted on 30 March 1999 and laid on the table of the Legislative Council on 31 March 1999. This is a temporary measure taken under the Public Revenue Protection Ordinance (Cap. 120) ("the Ordinance") to give effect to most of the revenue proposals announced in the Budget Speech delivered by the Financial Secretary on 3 March 1999 when moving the Second Reading of the Appropriation Bill 1999. The Revenue Bill 1999 ("the Bill") giving long-term effect to these proposals will be introduced into the Legislative Council following the ordinary legislative procedures. The Administration has given notice to present the Bill in the Legislative Council on 21 April 1999.
2. Under section 2 of the Ordinance, so long as the Order remains in force, it shall have the full force and effect of law. Section 5(2) provides that the Order shall expire and cease to be in force :
" (a) upon the notification in the Gazette of the rejection by the Legislative Council of the bill or resolution in respect of which the order was made; or
(b) upon the notification in the Gazette of the withdrawal of the bill or resolution or order; or
(c) upon the bill or resolution, with or without modification, becoming law in the ordinary manner; or
(d) upon the expiration of 4 months from the day on which the order came into force,
whichever event first happens."
3. Under section 6 of the Ordinance, any excess of duty, tax, fee, rate or other item of revenue paid under the Order over that payable immediately after the expiry of the Order shall be repaid to the person who paid the same.
4. The Order contains the Bill in the Schedule. We have prepared a table (see Annex A
) setting out the legal effect of the Bill and the corresponding parts of the Budget Speech to which the proposals are referred. Members may refer to LegCo Brief File Ref. FIN CR. 7/2201/98 on the Bill issued by the Finance Bureau on 30 March 1999 for background information.
5. The Order has come into force on 1 April 1999. However, by virtue of clause 2 of the Bill in the Schedule to the Order :
- the betting duty on horse races would come into effect on and after 1 September 1999;
- the proposals relating to the Cross-Harbour Tunnel would take effect on and after 1 September 1999;
- the proposed increases in fixed penalties would take effect on and after 1 August 1999.
6. The long title of the Ordinance states that the Ordinance is to protect the revenue of Hong Kong. It is clear from the provisions of the Ordinance that any order made thereunder is intended to be a provisional and temporary measure for the purpose of preventing the avoidance of payment of tax. Since the inclusion of the concessions (listed in paragraph 3 of the LegCo Brief) and the proposals that do not take immediate effect (listed in paragraph 5 above) does not serve such purpose, we have asked the Administration to provide the reasons for this inclusion in the Order.
7. The Administration relies on section 2 of the Ordinance (see Annex B) as their legal basis for making the Order. That section provides that if the Chief Executive approves of the introduction into the Legislative Council of a bill, he may make an order giving full force and effect of law to all the provisions of the Bill (italics added). Since the Administration has decided on the format of an omnibus bill, that bill must be set out in the Order in its entirety. In addition, the Administration is of the view that concessions can be included because section 2 covers "removal" or "alteration" (i.e. increase or decrease) of any duty, tax, fee, rate or other item of revenue.
8. There does not appear to have any legal restrictions preventing the Administration from introducing an omnibus bill which includes all the revenue proposals (except the tax rebate) announced in the Budget Speech on 3 March 1999. However, by invoking section 2 of the Ordinance to make a Public Revenue Protection Order, the Administration has made it impossible for itself to honour the assurance given by the then Attorney General in December 1974 at the Second Reading debate of the Public Revenue Protection (Amendment) Bill 1974 in which the Administration assured the Legislative Council that the Ordinance will not be used except for its true purpose of protecting the revenue (see Annex C). Furthermore, it has created the anomaly that proposals which are not properly within the scope of a Public Revenue Protection Order have been included because of the requirement that the Order has to include all the provisions of the Bill.
9. In our view, the fixed penalties imposed under the Fixed Penalty (Traffic Contraventions) Ordinance (Cap. 237) and the Fixed Penalty (Criminal Proceedings) Ordinance (Cap. 240) proposed to be increased under clauses 23 and 25 of the Bill do not fall within any of the descriptions of revenue referred to in section 2 of the Ordinance. The Administration argues that "revenue
in this context means "general revenue
which includes income from fixed penalties.
10. The Administration's interpretation ignores the rendition for "revenue" in the Chinese text of the Ordinance. Section 10B of the Interpretation and General Clauses Ordinance (Cap. 1) provides that the English language text and the Chinese language text of an Ordinance shall be equally authentic, and the provisions of the Ordinance are presumed to have the same meaning in each authentic text. Where a comparison of the authentic texts discloses a difference of meaning, the meaning which best reconciles the texts, having regard to the object and purposes of the Ordinance, shall be adopted. In accordance with this principle of construction, we believe that "revenue" in the English text should have a narrow meaning in order to reconcile with "稅收" in the Chinese text. It should not include fines or penalties imposed by or under the authority of any Ordinance.
11. In accordance with section 34(2) of the Interpretation and General Clauses Ordinance (Cap. 1), any amendment to the Order has to be made by 28 April 1999, or by 5 May 1999 if the intervention period is extended by resolution of Legislative Council.
Wong Sze-man, Bernice
Assistant Legal Adviser
Legislative Council Secretariat
8 April 1999
Revenue Bill 1999
1 The proposed reduction would apply to an export declaration on which the shipment date specified is on or after 1 April 1999.
|Clauses of the Bill in Schedule to the Order
||Paragraphs in the 1999-2000 Budget Speech||Legal Effect
|Clauses 3 and 4
||The Import and Export (Registration) Regulations (Cap. 60 sub. leg.) would be amended to reduce the charge imposed under the Regulations in respect of re-exports from Hong Kong, so that there will be a uniform charge for all export declarations.1|
|Clauses 5 to 7
||Paragraphs 167 and 168
||The Betting Duty Ordinance (Cap. 108) would be amended to increase the rates of duties imposed on exotic bets on horse races from 18% to 19% and on lottery proceeds from 20% to 25%, and to correspondingly reduce the percentages of the bets and proceeds to be allocated in prizes.2|
||Paragraphs 152 to 154
||Resolution of Legislative Council (L.N. 288 of 1998) made and passed under the Dutiable Commodities Ordinance (Cap. 109) would be amended to maintain the duty on light diesel oil at a reduced rate of $2 per litre until 31 March 2000.
|Clauses 9 and 10
||The Estate Duty Ordinance (Cap. 111) would be amended to exempt from estate duty the moneys payable under and interests in a policy of insurance effected on the life of a deceased person.3|
|Clauses 11 and 12
||The Inland Revenue Ordinance (Cap. 112) and the Inland Revenue (Qualifying Debt Instruments) Order (Cap. 112 sub. leg.) would be amended to reduce the minimum denomination to $50,000 or its equivalent in foreign currency for newly issued debt instruments in respect of which interests and trading profits are subject to profits tax at concessionary rates.
|Clauses 13, 14 and 16(a)
||The Stamp Duty Ordinance (Cap. 117) would be amended to remove the existing execution requirements in respect of a contract note for the sale or purchase of Hong Kong stock effected through the Stock Exchange of Hong Kong Limited.
|Clauses 16(b) to (e) and 17
||The Stamp Duty Ordinance (Cap. 117) would be amended by -|
(a) removing the requirement that the borrowed stocks have to be returned to the lender within 12 months after the stocks are borrowed;
(b) specifying requirements for stamp duty exemption to be granted, including the requirements to return specified stock and to make specified payment;
(c) amending the registration requirements in respect of stock borrowing and lending agreements.
|Clauses 15, 18, 19, 20 and 21
||Paragraphs 161 to 166
||The Stamp Duty Ordinance (Cap. 117) would be amended to -|
(a) specify the circumstances under which a cancelled chargeable agreement for sale is not subject to stamp duty;
(b) provide for a deferred payment of stamp duty on chargeable agreements for sale which would be implemented by a conveyance on sale;
(c) revise the rates of stamp duty payable in respect of conveyances on sale, and agreements for sale, of immovable property.4
||The Air Passenger Departure Tax Ordinance (Cap. 140) would be amended to exempt passengers arriving and departing from Hong Kong within the same day from liability to pay air passenger departure tax.
|Clauses 23 and 24
||The Fixed Penalty (Traffic Contraventions) Ordinance (Cap. 237) would be amended to increase the fixed penalty imposed in respect of a contravention of the provisions of the Ordinance from $320 to $410. Consequentially, the Resolution of Legislative Council (Cap. 237 sub. leg.) would be repealed.5|
||The Fixed Penalty (Criminal Proceedings) Ordinance (Cap. 240) would be amended to increase the fixed penalties imposed in respect of contraventions of the provisions of the Ordinance as follows :-|
(a) from $320 to $410;
(b) from $450 to $570;
(c) from $1,000 to $1,270;
(d) from $230 to 300.6
|Clauses 26, 27, 38 to 42, 44 and 45
|| Various merchant shipping legislation would be amended to -|
(a) reduce or abolish certain fees and charges;
(b) remove the mandatory requirement for ships to be surveyed by Government surveyors.
|Clauses 28 to 32
||The Business Registration Ordinance (Cap. 310) and the Business Registration Regulations (Cap. 310 sub. leg.) would be amended to provide for the issue of a business registration certificate and a branch registration certificate valid for 3 years upon an election being made.
|Clauses 33 to 37
||Paragraphs 169 to 171
||The Road Tunnels (Government) Ordinance (Cap. 368) and the Road Tunnels (Government) Regulations (Cap. 368 sub. leg.) would be amended to -
(a) provide for the application of the Ordinance to the Cross-Harbour Tunnel;
(b) prescribe tolls for the use of the Cross-Harbour Tunnel7; and
(c) increase the toll for the use of Lion Rock Tunnel.
|Clause 43||Paragraph 172
||The Road Traffic (Parking) Regulations (Cap. 374 sub. leg.) would be amended to increase the maximum fees for the use of metered parking spaces and of pay and display parking spaces from $2 to $4 for every 15 minutes.
2 The increase in betting duty on horse races would take effect on and after 1 September 1999.
3 The proposed exemption would apply in relation to the estates of persons dying on or after 1 April 1999.
4 The proposals would apply to agreements for sale where the relevant date within the meaning of section 29B(3) of the Stamp Duty Ordinance (Cap. 117) is on or after 1 April 1999.
5 The proposals would take effect on and after 1 August 1999.
6 The proposed increase in fixed penalties would take effect on and after 1 August 1999.
7 The proposals relating to Cross-Harbour Tunnel would take effect on and after 1 September 1999.