LCQ8: Declaration Charges and Clothing Industry Training Levy
Following is a written reply by the Acting Secretary for Commerce and Economic Development, Mr Gregory So, to a question by the Hon Vincent Fang in the Legislative Council today (June 8):
According to the Import and Export (Registration) Regulations (Cap. 60 sub. leg. E), importers and exporters are required to pay "declaration charges" according to statutory rates in respect of the articles they import and export, and if the articles exported are Hong Kong-manufactured clothing and footwear items specified in Schedule 1 to the Industrial Training (Clothing Industry) Ordinance (Cap. 318), exporters are required to pay an additional "clothing industry training levy" which will be used by the Clothing Industry Training Authority (CITA) for training purposes. Moreover, the Government reached a new funding arrangement with the Hong Kong Trade Development Council (HKTDC) in 2001, under which, the annual subvention to HKTDC from the year 2002-2003 would be based on 60% of the gross yield from the total "declaration charges" on imports, domestic exports and re-exports; but it has been learnt that the annual subvention allocated by the Government to HKTDC since the implementation of the new arrangement has all along been less than 60% of the gross yield from the total "declaration charges" received by the Government. In this connection, will the Government inform this Council:
(a) in each of the past five years, of the total amounts of "declaration charges" and "clothing industry training levy" received by the Government and the changes in such amounts, the respective total subventions allocated to HKTDC and CITA from the yields from the two levies, and whether it knows the respective percentages of such subventions in the annual revenues and total expenditures of these two organisations (set out in table form); if such subventions were insufficient to fully cover the operation expenses, of the respective avenues through which these two organisations obtained funds to make up for the shortfall, and whether their development and work had been constrained as they needed to solve the problem of insufficient funds on their own;
(b) why the Government does not fully allocate the gross yields from the two levies to these two organisations to fund their operations and developments, so as to assist Hong Kong's import and export enterprises in market expansion, promote its economy and trade, and nurture talents for its clothing industry;
(c) of the uses of the balances of the gross yields from the two levies after deducting the subventions to these two organisations in the past five years; whether the Government has planned to use such balances for other activities which promote the development of trade and the clothing industry of Hong Kong; if it has, of the details; if not, the reasons for that;
(d) given that there is double levying on Hong Kong-manufactured clothing and footwear items which are subject to both "declaration charges" and "clothing industry training levy", whether the Government will consider abolishing either one of the levies; and
(e) given that Hong Kong is a duty-free port and the yield from import and export "declaration charges" is not a major source of government revenue, whether the Government will review the rates of the two levies and the need to keep them; whether it will consider lowering the rates of or abolishing such two levies?
The objectives and operation of Declaration Charges (Charges) and Clothing Industry Training Levy (Levy) are different. Our response to the questions relating to the Charges and the Levy is as follows.
Under the Import and Export (Registration) Regulations (Cap. 60 sub. leg. E), a person who imports, exports or re-exports any article other than an exempted article is required to lodge with the Commissioner of Customs and Excise an import or export declaration relating to such article within 14 days and pay the Charges. Currently, the subvention to Hong Kong Trade Development Council (HKTDC) is determined having regard to the Government's financial position, HKTDC's funding requirements, new demands for trade-related services, inflation/deflation situation, and by way of reference to a ceiling set at 60% of the total amount of the Charges received in the preceding year.
The amount of the Charges received by the Government, the change in such amount, the annual subvention to HKTDC as well as such subvention as a percentage of HKTDC's total income and total expenditure in the past five years are set out in Table 1 of the Annex.
In addition to Government subvention, HKTDC's income sources include operating income (e.g. income from trade promotion activities) and investment income etc. With the increase in HKTDC's income sources, Government subvention to HKTDC as a percentage of HKTDC's total income has been decreasing accordingly. HKTDC has adequate resources to carry out its various promotion programmes, including helping Hong Kong companies, especially small and medium enterprises, to develop the Mainland and overseas market as well as promoting Hong Kong's products and services. As a matter of fact, there were surpluses in HKTDC's income and expenditure account in the past years.
All Charges will first be credited to the General Revenue Account. The HKTDC will be allocated subvention through the annual estimates of the Commerce, Industry and Tourism Branch of the Commerce and Economic Development Bureau as approved by the Legislative Council. Besides subventing the HKTDC, the Government provides resources for trade promotion and other policy areas, including those given to the Trade and Industry Department, overseas Hong Kong Economic and Trade Offices and Invest Hong Kong, to promote Hong Kong's external commercial relations, attract investment and support small and medium enterprises and industries etc. The Government will review the level and arrangement of the Charges as when necessary.
Clothing Industry Training Levy
In accordance with the Industrial Training (Clothing Industry) Ordinance (Cap. 318), the Clothing Industry Training Levy is imposed on exporters based on the Free on Board value of their exported clothing items for the purpose of supporting the operation of the Clothing Industry Training Authority (Authority). The Customs and Excise Department is responsible for collecting the Levy, and surrender the net Levy income to the Authority after deducting the costs of collection and enforcement. The operation of the Authority is supported by income from Levy receipts, course fees and investment return etc. The Authority does not receive Government subvention.
The amount of the Levy collected, the change in such amount as well as the net Levy income as a percentage of the Authority's total income and expenditure in the past five years are set out in Table 2 of the Annex.
The Authority plays a pivotal role in providing training courses for the clothing industry, establishing and maintaining industrial training centres for these courses, and assisting in the placement of persons completing training courses. The Levy is an established income source of the Authority. The Government considers it appropriate to continue to collect the Levy at this stage, and will review as when necessary.
Wednesday, June 8, 2011