PLC Paper No. CB(1)191
(These minutes have been seen by the
Administration and cleared with the Chairman)
Ref: CB(1)/BC/25/96

Bills Committee on
Dutiable Commodities (Amendment) Bill 1997

Minutes of the meeting
held on Thursday, 22 May 1997,
at 2:30 pm in Conference Room B
of the Legislative Council Building

Members present :

    Hon Ronald ARCULLI, OBE, JP (Chairman)
    Hon Mrs Miriam LAU Kin-yee, OBE, JP
    Dr Hon HUANG Chen-ya, MBE
    Hon CHAN Kam-lam
    Hon CHAN Wing-chan
    Dr Hon LAW Cheung-kwok
    Hon NGAN Kam-chuen
    Hon Sin Chung Kai

Public officers attending :

Mr Alan SIU
Deputy Secretary for the Treasury (Atg)
Miss Vivian SUM
Principal Assistant Secretary for Treasury (Atg)
Mr Gilbert MO
Deputy Law Draftsman (Atg)
Mr Michael CHIK
Assistant Commissioner of Customs and Excise
Mr Ronald AU
Senior Superintendent, Customs and Excise Department

Clerk in attendance :

Miss Odelia LEUNG,
Chief Assistant Secretary (1)1

Staff in attendance :

Ms Bernice WONG,
Assistant Legal Adviser 1
Mr Kenneth KWOK,
Senior Assistant Secretary (1)2

I Election of Chairman

Hon Ronald ARCULLI was elected Chairman of the Bills Committee.

II Meeting with the Administration

2. Members raised no objection to the proposed increase in duty rates for tobacco and methyl alcohol by 6%, the proposed increase in penalties for offences relating to the marking and detreatment of marking of light diesel oil and the technical amendment to clarify the interpretation of a provision relating to the export of dutiable and duty-paid goods. Dr Hon LAW Cheung-kwok expressed reservations about the proposed reduction in the ad valorem rate on wine from 90% to 60%. Other members of the Bills Committee supported the Administration’s proposal regarding wine duty.

3. At the Chairman’s request, the Acting Deputy Secretary for the Treasury (DS for Tsy) (Atg) briefed members on the proposed increase in duty rate for fuel. He explained that to maintain the real value of duty, the Bill sought to increase it by 6% in line with inflation. The proposed adjustment would increase the revenue by $276 million in 1997-98 and $1,242 billion up to 2000-01. The Consumer Price Index A would be raised by 0.0143%. Taxi and public light bus drivers would pay an additional $6 and $9 respectively each day for fuel. In the Administration’s view, the overall effect on the transport trade and on the livelihood would be minimal.

4. In response to a member, DS for Tsy (Atg) explained that the Administration normally adjusted duty rates annually for commodities which were taxed on quantity basis in line with inflation so as to maintain the revenue in real terms. This arrangement did not apply to dutiable commodities taxed on ad valorem basis because inflation should have been reflected in the price of such goods.

5. A member pointed out that the price of diesel oil had increased on seven occasions from $6.16 to $7.23 per litre in the past year, totalling a net increase of 18%. Members enquired whether the Administration had any established policy on fuel duty vis-a-vis fuel price. DS for Tsy (Atg) responded that fuel duty was collected by oil companies on behalf of the Administration and the Government did not have any policy on the ratio of fuel duty to fuel price. The Administration would assess the economic implications of any proposed increase in duty rate and would take into account special circumstances. For example, the Administration had not increased fuel duty in line with inflation during the Gulf War when oil price fluctuated wildly. The Administration considered that the extent of increase in oil price over the past year did not justify the freezing of fuel duty at the current rate. DS for Tsy (Atg) added that to encourage the use of public buses which had daily passengers of over three million, duty was not charged on diesel oil for buses.

6. Members opined that taxis and public light buses were public modes of transport and their total daily passengers exceeded 2 million. Any increase in duty rate on fuel would inevitably affect future adjustments to taxi fare.

7. A member considered it necessary to examine the policy on Government subsidy on different modes of public transport. Another member was of the view that oil price was monopolised by oil companies. Members agreed that these issues fell outside the ambit of the Bill and should be raised by individual members in the relevant Panels.

8. Members considered the fuel price in Hong Kong already on the high side as compared with other countries. Since the proposed increase would amount to only $276 million for 1997-98 as against the substantial reserve, the majority of members of the Bills Committee objected to the proposed increase and suggested that clause 3(c) be deleted. Dr Hon LAW Cheung-kwok and Hon SIN Chung-kai had reservations. Dr Hon HUANG Chen-ya indicated that the Democratic Party would consider objecting to the proposed increase provided that the benefits could be passed onto passengers. The Administration was requested to provide a graph showing the change of fuel price, fuel tax and the Consumer Price Index A for the past five years.

9. DS for Tsy (Atg) and the Deputy Law Draftsman advised that section 6 of Public Revenue Protection Ordinance (PRPO), Cap. 120, provided that any duty paid under any order made under the Ordinance in excess of the respective duty payable immediately after expiration of that order should be refunded to the payees. As there would be technical difficulties in refund, the majority of members suggested that the excess duty collected since 2:30 pm on 12 March 1997 should not be refunded to the payees. To achieve this, the Bills Committee would move an amendment to add a new clause to the Bill to specify that section 6 of PRPO should not apply. The Bills Committee agreed that Hon Mrs Miriam LAU would move the amendments on its behalf.

10. DS for Tsy (Atg) said that as the Chinese version of the Dutiable Commodities Ordinance had been declared authentic and gazetted on 16 May 1997, the Administration would move Committee stage amendments to provide the Chinese version of the Bill.

11. Members agreed that a report on the deliberations of the Bills Committee be submitted to the House Committee on 30 May 1997 to recommend resumption of Second Reading debate on the Bill on 11 June 1997. The Chairman reminded members of the deadline for notice of amendments on 31 May 1997.

12. The meeting ended at 3:25 pm.

Provisional Legislative Council Secretariat
2 September 1997

Last Updated on 30 November 1998