Provisional Legislative Council

PLC Paper No. ESC 31
(These minutes have been
seen by the Administration)

Ref : CB1/F/3/2

Members present:

Dr Hon Philip WONG Yu-hong (Chairman)
Hon NG Leung-sing (Deputy Chairman)
Dr Hon Raymond HO Chung-tai, JP
Hon Mrs Peggy LAM, JP
Hon Henry WU
Hon Henry TANG Ying-yen, JP
Hon HUI Yin-fat, JP
Hon CHAN Wing-chan
Hon TSANG Yok-sing
Hon Andrew WONG Wang-fat, JP
Dr Hon Charles YEUNG Chun-kam
Hon YEUNG Yiu-chung
Hon IP Kwok-him
Hon CHENG Yiu-tong
Hon CHOY So-yuk

Members absent :

Hon WONG Siu-yee
Hon James TIEN Pei-chun, JP
Dr Hon David LI Kwok-po, JP
Dr Hon LEONG Che-hung, JP
Hon Kennedy WONG Ying-ho
Hon Bruce LIU Sing-lee
Hon Paul CHENG Ming-fun, JP
Hon Timothy FOK Tsun-ting

Public officers attending :

Mrs Carrie LAM, JP

Deputy Secretary for the Treasury

Mr D W PESCOD

Deputy Secretary for the Civil Service

Mr Alan SIU

Principal Assistant Secretary for the Treasury

Mr H S WONG, JP

Commissioner of Inland Revenue

Mr David LITTLE

Law Officer

Mr Peter H K CHEUNG, JP

Administrator, Department of Justice

Mr Michael M Y SUEN, JP

Secretary for Constitutional Affairs

Mr Robin IP

Deputy Secretary for Constitutional Affairs

Mr Patrick C K HO

Principal Assistant Secretary for Constitutional Affairs

Clerk in attendance :

Mrs Vivian KAM

Chief Assistant Secretary (1)5

Staff in attendance :

Ms Pauline NG

Assistant Secretary General 1

Mr Kenneth KWOK

Senior Assistant Secretary (1)8

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EC(97-98)30

Proposed creation of a permanent post of Deputy Commissioner of Inland Revenue (D3) in the Inland Revenue Department to cope with the increasing volume and complexity of work of the department.

As the main duties of the post of Deputy Commissioner of Inland Revenue were related to tax collection and investigations as well as formulation of strategies on information technology, members enquired about the effectiveness of the measures taken in combating tax evasion since the creation of the supernumerary post, and the need for making the post permanent. In response, the Commissioner of Inland Revenue (CIR) advised that the supernumerary post was created in July 1995 to cope with the increasing volume of work at Deputy Commissioner level and the complexity in tackling tax evasion and avoidance cases. During the two years since the creation of the supernumerary post, each year about 2 000 tax evasion and avoidance cases had been identified and $2,000 million recovered; the ratio of tax and penalty was about 60% and 40% respectively. CIR advised in response to a member that the cost for collecting every $1 tax was about 0.91 cents on average.

2.In continuing, CIR advised that under the guidance of the Deputy Commissioner, Inland Revenue Department (IRD) had just completed a five-year information technology programme to facilitate assessing work and the identification of tax evasion and avoidance activities, and would embark on another five-year programme to further improve the system. Furthermore, a second prosecutions team had been formed to deal with cases of tax evasion and avoidance and its effectiveness was already felt. On the public education front, IRD had, under the direction of the Deputy Commissioner, organised seminars for professionals to familiarise them with new taxation legislation and related forms, arranged for briefing sessions to help new employers to understand their tax responsibilities, visited community centres to help in filling out tax returns, and stated clearly on tax demand notes the tax payers' responsibilities to pay tax and the penalty for delayed payment.

3.CIR added that although the afore-mentioned measures had increased considerably the efficiency of the Department, further improvements were called for. Furthermore, the workload of the Department would increase with the anticipated expansion in population and a corresponding growth in commercial activities. In order to formulate policies and direct activities for improvements in the various areas of tax collection and recovery, public education and prosecution, information technology and taxpayer services, input by an officer at Deputy Commissioner level would be required and the proposal for making the supernumerary post of Deputy Commissioner of Inland Revenue permanent had accordingly been made.

4.In response to members on the measures for recovering back tax, CIR explained that IRD could either initiate legal proceedings or take administrative measures instead; the penalty imposed could be as high as 300% of the tax amount. It was however difficult to provide an estimate on the number of persons who evaded or avoided tax, but the incentive to evade or avoid tax should be low in Hong Kong on account of the low tax system. The Bill of Rights Ordinance should not impinge on CIR's power to prevent those who evaded or avoided tax liabilities to leave Hong Kong, as the leave of the court could always be sought expediently.

5.The item was voted on and endorsed.

EC(97-98)31

Proposed creation of a permanent post of Principal Government Counsel (DL3) in the International Law Division to head a new Mutual Legal Assistance Unit and redeployment of two permanent posts of Deputy Principal Government Counsel (DL2) from the Prosecutions Division to the International Law Division in the Department of Justice.

6.The item was voted on and endorsed.

EC(97-98)32

Proposed creation of two supernumerary posts of one Administrative Officer Staff Grade B (D3) and one Administrative Officer Staff Grade C (D2) for the period up to 31 March 1999 in the Constitutional Affairs Bureau of the Government Secretariat and increase of the permanent establishment ceiling of the Bureau from $14,966,000 by $1,451,460 to $16,417,460 in 1997-98.

7.Members were concerned with the sufficiency of the two directorate posts and the two non-directorate posts for undertaking the review of the structure of local representative government. They also enquired about the need for these supernumerary posts up to 31 March 1999 in view of the anticipated completion of the review in September/October 1998.

8.The Secretary for Constitutional Affairs (SCA) said in response that the proposed team of four staff would form the core team for the review but other officers in the Constitutional Affairs Bureau would also help out. Creation of the posts up to the end of March 1999 had been proposed as the officers would also have to implement the decisions arising from the review. In reply to a member on the possibility of engaging consultants to conduct the review, SCA advised that the task called for persons who were familiar with the functioning of the Provisional Municipal Councils, District Boards and related government departments, and the deployment of civil servants would be more appropriate.

9.As regards the composition of the inter-departmental steering group, SCA said that on account of the broad scope of the review, staff from various departments such as the Urban Services Department and the Regional Services Department would join the steering group to ensure better co-ordination of efforts.

10.The item was voted on and endorsed.

11.The meeting was adjourned at 11:30 am.

Provisional Legislative Council Secretariat
25 November 1997