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In terms of fundamental reform of the economy and changes in Hong Kong, its geopolitical situation needs to consider transport policy and take into account the peculiarities of transport and its role in the socio-economic development of Hong Kong. National transport policy must reflect innovative approaches to meet the needs of society and the economy in transport services for a dignified life and free development of the individual.

Transport policy in terms of economic reform and changes to the system of transport management needs to define the main activities, taking into account the characteristics of individual modes of transport, the balance of national and regional interests, tactical and strategic objectives of the country's economic system. Pressing problem is to achieve a rational correlation between modes, coherent dynamics in their development and use. On the "joints" of the interaction among modes, the transport is currently experience the greatest losses and imbalances. For example, because of the institutional and organizational differences, as well as departmental and territorial fragmentation between modes of transport and the entities, companies are not always free to choose the most rational transport schemes. There is a tendency to disproportionate development of transport infrastructure, leading to a loss of system effect on the transport market, both for producers and the carriers. Resource capacity of transport, due to its development of the volume, structure and placement of material production, the significant role of public transport in functions - all this makes it necessary to improve the manageability and sustainability of the transport system. Here, obviously, the direct involvement of the state in the transport activity will be reduced, but the extent of state regulation does not weaken (Nash, 2003, p. 345).

It should be noted that transportation is divided into passenger and freight services. The cost of transport services is formed depending on what exactly needs to be transported.

The main factors that influence on the pricing establishment are:

A. Fuel. Any transportation runs on fuel. The car, boat, plane are dependent on oil, and it is her main source of energy. One kind of fuel is electricity, the production of which also requires a cost. Accordingly, all forms of transport depend on the raw materials. Depending on the market price of fuel, the cost of transportation is included the price of the estimated or actual cost. Each has his own mode of transport, so the price may vary significantly (Jones, 1991, p. 196).

B. Distance. The further required to carry the load. This includes not only the cost of fuel, but also the time spent by people involved in transportation. However, there is another side to the coin: tone-kilometer. This value is formed depending on the load and distance. There is a set of calculations that result set final prices for transport services on the basis of these values.

C. Weight of the load size. The size and weight of the load plays a major role in the formation of the cost of transportation. The costs of loading, transport, unloading require more effort, energy and time.

D. Storage Term. Depending on the storage term, price is formed for its transportation. Perishable goods will cost more.

The mentioned above points are the main components of the cost of transport. The main costs for the transportation of goods consist of the cost of the initial-end operations (loading and unloading) and directly on the carriage. The the cost products transportation can be calculated out of the following formula: C = P + Z D, where C is the cost for transporting one ton of cargo, P is the cost for the initial-final operation on 1 ton of cargo, W is the cost for moving one ton of cargo for 1 kilometer, D is the distance in kilometers. From this formula, it can be gotten the cost of tone-kilometers, which was mentioned above: C = P / D + Z. It should be noted that with increasing distance transportation cost tone-kilometers decreased.

Transportation plays an important role in the development of foreign trade enterprise (Jones, 1991, p. 194). Its normal function provides the obligations of the parties to the sale, the commercial effect for foreign trade agreements. Violation of the transport process often leads to exporters’ material losses. As a result, importers make their products very competitive.

The world`s transformation are based on the mentioned above principles, not different is Hong Kong transport pricing policy.

Hong Kong Transport Pricing Policies

Hong Kong Transport Pricing Policies are based on few principles. Transport strategy defines the role and place of transport in the socio-economic development of Hong Kong, the strategic goals of its development, the main objectives, form and content of the state in the field of transport. It focuses on identifying key provisions and the formation of the main directions of the national transportation policy for the long term. The main transport policies are: fuel tax policy, car ownership taxation, goods vehicle controls and area pricing. Timothy Hau in his research on transport pricing policies in Hong Kong identify three main points:“First, the time-tested instrument of raising FRT by 50% on private cars to reduce the car fleet by 17% is proposed. The advantages include administrative simplicity and high benefits. However, the disadvantage is that it suppresses car ownership nonselective, regardless of a motorist's intended use. Second, doubling the fuel tax yields about a third of the benefits obtainable from the car ownership taxation measure. Since fuel consumption is roughly proportional to distance, the fuel tax is an effective measure in reducing usage, especially when stop-and-go jam situations mean additional fuel taxes incurred. Third, an increase in goods vehicle ownership taxation which reduces the goods vehicle fleet by 15% yields benefits that are four fifths of those of the car ownership taxation package” (Hau, p.7). Indeed, the presented policies can greatly impact the general transport pricing in Hong Kong.

Fuel Tax

Hong Kong is a special administrative region of the People's Republic of China and is widely known in the world of low-tax jurisdiction. Hong Kong is unique: it is not offshore, but at the same time provides for the taxation of companies operating abroad. A key factor in favor of Hong Kong is a simplified tax system and low tax rates, free flow of information, the lack of foreign exchange controls, the absence of corruption by the government, transport and infrastructure development, economic geography, professional services, political stability and security. Foreign direct investment in Hong Kong is growing (Allport, 1996, 179).

Principle of territorial corporate tax is the basic and the main feature of Hong Kong. Hong Kong companies are taxable only if they conduct activities in Hong Kong and receive income from sources within the country. Income received from abroad are not taxed, even when such income is accumulated in Hong Kong accounts. Hong Kong's tax system is modeled upon the British and largely inherited the principles of a complex of measures the British Commonwealth in the field of tax policy, adopted in 1947. In Hong Kong, there are three main direct taxes: income tax, payroll tax and property tax. In Hong Kong, there is no sales tax, value added tax, income tax on turnover tax on capital gains. There is no division of companies into resident and non-resident. This means that the Hong Kong company shall be taxable only in that case if the income was derived from a source in Hong Kong. If the company had no activity in Hong Kong and did not receive income from sources in Hong Kong, it is not taxable. The main piece of legislation is the Law on Internal Revenue (Inland Revenue Ordinance). It provides for the use of four types of income tax:

-  income tax;

-  payroll tax,

-  property tax

- taxes on interest income.

There are no taxes on capital gains, dividends, interest, royalties received from abroad or sent abroad. The income tax rate for companies operating in Hong Kong is 17.5% (GTZ, 2001. To be exempt from income tax in practice the company must meet the following criteria (Viegas, 2001, p.346):

-  The company has no fixed places of business in Hong Kong, such as the office, shop, jobs,

-  Traded goods should not be made in Hong Kong;

-  No employees should be working in Hong Kong;

-   Contracts should be entered into and performed outside Hong Kong;

-   No suppliers and contractors should be located in Hong Kong;

-  Carriage of goods between ports should be located outside Hong Kong.

 Car Ownership Taxation

Car Ownership taxation is aimed to reduce the amount of the car owners and to increase the budged. Taxpayers are the owners of motor boats, snowmobile, etc., who paying tax to the local budgets seat vehicle owners. Taxes on vehicle owners are taxed vehicles due to obtain the course registrations. “Since motorization is correlated with a country's wealth, so the same can be expected to occur in Hong Kong, especially with such a low car ownership level at present. With the real GDP growth rate averaging about 71/2% (plus a 11/2% population growth rate and an unemployment rate averaging less than 3%) over the last two decades (1974-93), it is clear that in order to prevent hyper congestion from occurring the incessant demand for auto ownership cannot be allowed to grow unchecked without imposing some form of abatement”(Hau, p.5). Therefore, the main reason for this restriction is the great number of cars on the streets nowadays.

Policies Impact on Solving Transport Issues

Despite the fact that transports play an important role in the life of the city, its development began to cause a lot of problems. Finding the decision how to solve them is not always an easy task.  To solve the problems connected to traffic overloading and save the city from traffic jams, the administration has invested a lot of money in the construction of surface roads, bypass routes, new bridges and overpasses different. Now the main cause of congestion is considered to be heavy trucks, trailers, and bottlenecks. Oversupply of vehicles on the roads has led to an increase in road accidents, in which the technique is suffering, and often people are dying. Like any major city with a developed economy, the residents suffer from air pollution. Number of vehicles in the city is growing every year, and with it, increased the gross emission of harmful products into the atmosphere (Verhoef, 1996, p.18-21).

Therefore, the observed strategies are crucial to improve the quality of life in the city. The mentioned policies allow to gain many positive results. Thus, after implementation of the mentioned policies the focus would be made on strategic goals formulated and  based on the concept of sustainable development, assess the current state of the economy and its geopolitical peculiarities and strategic imperatives - economic growth, welfare, maintaining the integrity and security of the country. Secondly, deregulation of the transport market in the optimization of state interference in the functioning of the transport sector would be considered.

Other positive results of the implementation and development of the mentioned policies will help to:

- combine the  strategies for all types of transport, based on their competitive advantages; the priority to the development of transport infrastructure, which creates conditions for territorial equity, access not only transport, but also the social benefits;

- balance the interests of government agencies, business and public institutions interested in the stability of the transport sector;

- maximize consideration and reflection characteristics of the regional dimension in the transport sector (Gomez-Ibanez,  1997, p.51). In addition, the mentioned policies ensure the sustainable development of transport in the complex economic infrastructure and substantial cost savings through coordinated development of transport and the productive forces;

-  create an "ideological" base for the improvement of transport legislation;

- orient the citizens, legislators, business, civil society, international partners in the major priorities of the transport system;

- clear out the lines of authority and responsibility of state bodies in the field of transport; fix the permissible scope and forms of state regulation and state support of transport, creating favorable conditions for the development of the transport business, production and export of transport services;

- ensure a balanced development of the different types of transport and optimal allocation of resources between them, to prevent the "sectoral lobbying";

- ensure maximum consideration and reflection characteristics of the regional dimension of the transport system; develop a long-term policy of engagement with the transport vehicle engineering and other related sectors of the economy;

- provide a systematic solution of problems of transport and environmental improvement of transport safety (Guiliano, 1994, 261).

“The Hong Kong Electronic Road Pricing System (ERP) experiment in 1983-85 involved fitting a sample of 2500 vehicles with electronic number plates on the underside of a vehicle. This video-cassette sized transponder permits radiowave communication with the electronic loops embedded below the road surface. Road side microcomputers installed at selected charging points in turn relay the vehicle's identification code to a control center. Car owners (only) are then sent monthly billing statements (similar to telephone bills) listing the amount of actual road usesubject to ERP” ( p.8)  mentiones Hau.

 Despite the facts that transport plays an important role in the life of city, with his appearance began to appear a lot of problems to solve that are not always possible. To solve this problem and save city from traffic jams, the administration has invested a lot of money in the construction of surface roads, bypass routes, new bridges and overpasses different. Oversupply of vehicles on the roads has led to an increase in road accidents, in which the technique is suffering, and often people are dying. Like any major city with a developed economy, the residents of the northern capital suffer from air pollution. Number of vehicles in the city is growing every year, and with it, increased gross emission of harmful products into the atmosphere (Gomez-Ibanez, 1997, p.149).

Therefore, cars and trucks make many types of air pollution. One way to combat pollution is a collection of the purchase of new machines taxes on pollution. The second way is a tax on gasoline, commensurate with the average external costs. The third way is subsidizing public transport. This mechanism allows to reduce the pollution in Hong Kong. To conclude, the mentioned above transport policies have very positive impact on the further development of the Hong Kong road, the increasing in the citizen life productivity, combat the air pollution and increase the quality of life in general.  The municipal authorities have understood that regardless of their wishes formed market of passenger transportation. To avoid spontaneity in the market, it is needed to organize the control based on legislative approval of rules.

Conclusions and Recommendations

To conclude, navigate and move in Hong Kong is easy thanks to the excellent transport system, tuned to the last detail, and clear signs are everywhere in English, which do not allow to get lost. Tourists can take the subway, light rail, buses, trams, ferries and taxis to get to your destination. However, different transport issues become very crucial for both tourists and the citizens. Therefore the changes in the national transport policies are needed. National transport policy must reflect innovative approaches to meet the needs of society and the economy in transport services for a dignified life and free development of the individual. We have already examined some transport pricing policies, in particular, fuel taxation, car taxation ownership, vehicle taxation, and others. However, after analyzing the issue, further recommendations can be provided. Due to the increase in the number of the private cars, the taxation can be the decreasing in prices and development in the field of minibuses. The appearance of this type of transport service should help to improve the service quality, because it increases the intensity of vehicular traffic, and decreased the range of motion. Therefore waiting time is reduced and the content of public transport buses, passengers can select a vehicle with a high level of comfort and higher rate of communication. At first glance, the involvement of non-state owned taxis for passengers at the existing city routes is justified. In this case, it is possible without investing in municipal transport, with private capital to improve the quality of services, or at least keep it at an acceptable level. Make sure that there is a need to improve the quality of the analysis can be based on technical and economic indicators of municipal public transport. Recommendation is to increase the tax for car owners. The fee for congestion externalities into account congestion helps to create the optimal traffic. Congestion tax should be higher during peak hours and at the most congested routes. Tax on congestion increases efficiency of urban transport system, reducing the length of trips. There are several alternatives to congestion tax:

1. Gasoline tax is not suitable as it will be the same on all routes and at any time.

2. Experience Parking Fees has shown reducing in the intensity of the movement. This encourages drivers use public transportation. However, the problem is that the board does not depend on the distance traveled.

3. Increase road capacity reduces congestion, resulting in increasing the benefits to the consumer.

4. Subsidizing public transportation encourages proportion of drivers traveling by public transport, reducing congestion.

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