Fees still rise despite budget surpluses

PUBLISHED : Monday, 10 December, 2007, 12:00am
UPDATED : Monday, 10 December, 2007, 12:00am

800 charges subject to annual increases

About 800 government fees are still subject to annual increases of 10 to 20 per cent despite the huge budget surpluses expected over the next few years.

While officials would not say when the government would push ahead with the increases, lawmakers cautioned that there must be sound justification for any adjustment.

Last week accounting firm Deloitte Touche Tohmatsu said a budget surplus of HK$70 billion would be achieved this financial year.

About 4,300 fees and charges fall under the so-called user-pays principle, by which the government is gradually charging for its services at full cost. About 80 per cent of the items are charged in full.

The fees cover items like examinations, certificates, registrations, permits and licensing.

After a freeze on fee increases spurred by the financial crisis in 1998, the government last launched a major revision in 2005 involving dozens of items that were said to have no direct impact on people's livelihoods and businesses.

With Hong Kong prices rising 3.2 per cent year on year in October, the inflation has fuelled concerns that the government may push ahead with the increases.

Civil service salaries, which take up the lion's share of service costs, were raised by 5 per cent this summer - the first increase in six years.

The Financial Services and Treasury Bureau said about 800 fees had not yet achieved full cost recovery. But it did not give a timetable on adjustments. 'The fee review is an ongoing exercise taking into account a number of factors, including the changes in cost level due to price adjustments and mode of operation,' a bureau spokesman said.

Under existing guidelines to achieve full cost recovery, the government will impose an annual 20 per cent increase within seven years on fees with a recovery rate of less than 40 per cent.

For services already charging 40 to 70 per cent of the cost, there will be an annual 15 per cent increase within three to seven years.

For items with cost recovery of more than 70 per cent, an annual 10 per cent increase will apply within three years.

'The guidelines still apply,' the spokesman said. 'The government will consider each fee adjustment on an individual case basis and exercise vigorous cost control to reduce the pressure for fee increases.'

Democratic Party legislator Sin Chung-kai agreed that charges should be increased in light of inflation and rising civil service salaries. But he hoped the increases would be moderate.

Chan Kam-lam of the Democratic Alliance for the Betterment and Progress of Hong Kong said: 'We basically support the user-pays principle, otherwise it would be unfair to subsidise some services with public funds.'

He said the government should justify any adjustments and it should first tackle services without direct impact on people's livelihoods.

Proceeds from fees and charges totalled HK$11.7 billion in the past financial year, making up 5 per cent of government revenue.

This year the government expects revenue to rise by 2.7 per cent to HK$11.98 billion. The bureau would not say if this was because of plans to raise charges.

The bureau spokesman said: 'The increase is attributable to factors like changes in service demand, introduction of new services and revision of the fee structure. It is not feasible to quantify the effect due to each factor.'