PLC Paper No. CB(1)9/97-98
(These minutes have been seen
by the Administration and
cleared with the Chairman)
Ref: CB1/BC/8/96
Bills Committee on Government Rent (Assessment and Collection) Bill
Minutes of meeting held on Thursday, 20 February 1997, at 2:30 pm in Conference Room B of the Legislative Council Building
Members present:
Hon Albert CHAN Wai-yip (Chairman)
Hon Ronald ARCULLI, OBE, JP
Hon James TO Kun-sun
Hon Ambrose LAU Hon-chuen, JP
Hon Margaret NG
Dr Hon LAW Cheung-kwok
Members absent :
Hon Howard YOUNG, JP
Hon CHEUNG Hon-chung
Hon NGAN Kam-chuen
Public officers attending :
- Mr Trevor Keen
- Principal Assistant Secretary for Planning, Environment and Lands
- Mr Esmond LEE
- Assistant Secretary for Planning, Environment and Lands
- Mr C S WONG, JP
- Deputy Commissioner of Rating and Valuation
- Mr F G Heath
- Assistant Commissioner of Rating and Valuation
- Mr A N Watson-Brown
- Senior Assistant Law Draftsman
Legal Department
Clerk in attendance :
- Miss Odelia LEUNG
- Chief Assistant Secretary (1)1
Staff in attendance :
- Ms Bernice WONG
- Assistant Legal Adviser 1
- Mrs Mary TANG
- Senior Assistant Secretary (1)2
Meeting with the Administration
(LegCo Paper No. CB(1)896/96-97 and CB(1)910/96-97)
Valuation of cemeteries for charging Government rent
1. Members noted that assessment of rateable values of cemeteries was modelled on the method adopted by the United Kingdom. About 15 cemeteries would be affected by the Bill and valuation of these cemeteries had yet to commence.
2. The Assistant Commissioner of Rating and Valuation (ACRV) stressed that the method of assessment which took into account the financial position of the tenants business was applied throughout the world. In assessing the rateable value, the profitability of the cemetery would be considered. Where no profits could be generated, the rateable value would be assessed as $1 per annum. Most of the 15 cemeteries affected were in the New Territories.
3. ACRV went on to explain that apart from profitability, there were various ways of assessing the rateable values, including rateable values of comparable properties, cost of building, replacement capital values, etc. In other words, as long as the premises were situated on an applicable lease, there would be ways of assessing the rateable value.
4. The Chairman was concerned that administrators of places of public religious worship and cemeteries might not be aware of the implications of the Bill as these premises were not liable to pay rates before. He was worried that some of these non-profitable organisations might run into financial difficulties upon implementation of the Bill. He suggested that as an administrative arrangement, the Administration might regard the rateable values of non-profitable churches and places of public religious worship as zero, such that Government rent which was fixed at 3% of the rateable value needed not be paid.
5. In response, the Principal Assistant Secretary for Planning, Lands and Works (PAS/PEL) explained that non-collection of rates did not mean that the property did not have a rateable value. There were other policies relating to churches and places of religious worship, such as charging of a concessionary premium. As far as the legislation was concerned, the Administration was bound by the provisions of Annex III to the Sino-British Joint Declaration (JD) under which exemption had not been granted to places of religious worship and cemeteries.
6. ACRV added that most administrators of places of religious worship and cemeteries should have been aware of the levy of Government rent at 3% of the rateable value as from 1 July 1997 because this was clearly spelt out in the leases at the time of extension.
7. Mr Ronald ARCULLI pointed out that Annex III to the JD had clearly exempted short-term tenancies and leases for special purposes from block extension. He enquired if leases for places of religious worship and cemeteries which had restrictions on uses should be regarded as leases for special purposes.
8. PAS/PEL confirmed that special purpose leases had been excluded from paragraph 2 of Annex III to the JD and these leases had been dealt with on a case-by-case basis.
9. Assistant Legal Advisor 1 (ALA 1) explained the definition of special purpose leases under the New Territories Leases (Extension) Ordinance, (NTLO) Cap. 150. A copy of the relevant section of the NTLO was made available to members at the meeting.
| 10. The Chairman shared the view of some members that the implications and the applicability of Annex III to the JD in respect of premises not liable to rates had not been fully deliberated upon the signing of the JD. | Admin. |
11. In response to members, the Administration agreed to check the records of discussions in the Sino-British Joint Liaison Group with a view to ascertaining the rationale behind the exclusion of short term tenancies and leases for special purposes from Annex III to the JD and the definition of special purpose leases. Members also requested the Administration to send legal experts familiarised with Annex III to the JD to attend the next meeting.
12. The Senior Assistant Law Draftsman (SALD) said that based on his knowledge, special purpose leases referred to in Annex III to the JD were confined to a limited number of leases which were defined under NTLO. These special purpose leases were not meant to cover a wide range of leases.
Differences in the rateable values of leased land renewed under the Crown Leases Ordinance (Cap. 40) and after the commencement of the Bill
13. Members noted that under Crown Leases Ordinance, Cap. 40, Crown rent was fixed at 3% of the rateable value as at the date of renewal and would remain unchanged throughout the renewed term of the lease, whereas under the Bill, Government rent would vary with any changes in the rateable value of the land.
Arrangements for collecting Government rent from lessees/ratepayers
| 14. Members noted that under clause 6(7), if the ratepayer, being the tenant, had paid the Government rent, he would have a statutory right to offset the payment from the rent payable to the landlord unless there was prior agreement otherwise. | Admin. |
15. In response to members concern about whether clause 6(7) would prevail over a general prohibition clause in a tenancy agreement which expressly disallowed the setting off of any debt against the rent payable to the landlord, PAS/PEL agreed to review the wording of the clause.
Amendments to existing specified form used for notifying ratepayers of decision of the Commissioner of Rating and Valuation (CRV) on objections (clause 21)
| 16. ACRV said that the Administration had taken on board members view to set out the reasons for refusing an objection on the decision form. CRV would consider improvements to the decision form and advise the LegCo Panel on Planning, Lands and Works in due course. | Admin. |
| 17. In response to Mr James TO, the Administration agreed to mention at the resumed debate on the Bill that CRV would set out in the decision form the reasons for refusing an objection. | Admin. |
Concept of rateable values in Annex III to the JD
18. Members deliberated on the concept of rateable values. They had reservations about the Administrations advice that rateable value should apply to unoccupied tenements, since rates were based on occupancy of tenements. Miss Margaret NG doubted the applicability of rateable values to unoccupied land, and sought clarification of the interpretation of Annex III to the JD in respect of land without rateable values as at 1984. ACRV explained that any property, whether occupied or not, was capable of forming a tenement and would have a rateable value. PAS/PEL reiterated that the fact that a property did not have a rateable value or had not been assessed to rates as at the entry into force of the JD did not mean that it could not have a rateable value for the purpose of charging Government rent. The Deputy Commissioner of Rating and Valuation (DCRV) referred members to section 36 of the Rating Ordinance, Cap. 116 which listed out the categories of land/tenements exempted from assessment to or payment of rates.
19. ALA1 referred members to CRV Vs Lau Kit Lau Mutual Aid Committee Case of 1985 which was tabled at the meeting. ALA1 said that the case was relevant in that it summarised the factors considered by a judge in assessing the rateable value of a tenement under the Rating Ordinance. The assessment was quite different from that provided in the draft Regulation concerning redevelopment of land, agricultural land and newly grant leases.
| 20. ACRV pointed out that assessment of rateable values as stipulated in the draft Regulation was modelled on the Rating Ordinance, except for newly granted sites pending development which was based on 5% of the market value, and redeveloped sites where the last ascertained rateable value would be used. | Admin. |
21. In response to Miss Margaret NG, the Administration would provide case law on assessment of rateable values for charging rates on unoccupied land, if available.
Structural alteration under clause 24(1)(c)
22. DCRV advised that under the Rating Ordinance, if a tenement with a structural alteration were to be deleted from the valuation list, an interim valuation would be included. The same would apply to the Bill under clause 24(1)(c). As requested by members at the last meeting, the Administration had reviewed the wording of the clause but did not consider it necessary to qualify "structural alteration" by adding words "affecting the rateable value" since structural alterations must affect the rateable value before any deletion would be contemplated.
Refund of over-paid of Government rent
23. The Administration explained that it did not consider it necessary to refund overpaid Government rent with interest. As for late payment, PAS/PEL said that a surcharge was levied as a penalty. ACRV added that the amount of overpaid rates was insignificant as compared with the amount of rates charged and it would therefore not be cost effective for the Government to spend resources on refund of over-payment with interest. In any case, the refund would be made within a short time. Mr Ronald ARCULLI requested the Administration to review the matter regularly.
Clause 31(1)(a)
| 24. Members requested and the Administration agreed to mention at the resumed debate on the Bill that the CRV would only require a person to provide information necessary for the purposes of the Bill. | Admin. |
Assessment of rateable values for different categories of land before, during and after development or redevelopment
25. ACRV briefly explained the assessment methods for different categories of land as outlined in paragraphs 8-18 of LegCo Paper No. CB(1)910/96-97.
26. Mr Ronald ARCULLI expressed reservations in accepting different methods in assessing rates for newly granted sites which were charged at 5% of the market value and for sites with buildings demolished for redevelopment which were charged at their last ascertained rateable values.
| 27. ACRV explained that the concept of the last ascertained rateable value was not new and was taken from the Crown Leases Ordinance. This concept had been in use for many years and had been included in many leases. | Admin. |
28. Members requested the Administration to provide justifications for applying different methods in assessing the rateable values for different categories of land before, during and after development or redevelopment.
29. Members agreed to schedule the following meetings -
- 28 February 1997 at 10:45 am; and
- 6 March 1997 at 8:30 am.
(Post-meeting note: The meeting on 28 February 1997 was subsequently cancelled.)
30. The meeting closed at 4:30 pm.
Provisional Legislative Council Secretariat
7 July 1997
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