In his third policy address on October 16, the chief executive of the Hong Kong Special Administrative Region, Donald John Lee, announced a reduction in the duty on spirits, among other new measures. Some believe it will boost Hong Kong’s“Night Economy”, but others worry about whether it will encourage drinking in disguise.
Major political parties in Hong Kong have called on the government to lower or abolish the liquor tax, local media reported Monday. In his policy address, John Lee announced that with immediate effect, the duty on liquor priced above HK $200 will be substantially reduced from 100% to 10% for those priced above HK $200, while the duty on liquor priced below HK $200 will be reduced, and for spirits priced at or below HK $200, the tax rate will remain unchanged“To promote the spirits trade and drive the development of high value-added industries such as logistics and storage, tourism and high-end restaurant consumption”.
Some 84% of duty-paid spirits (in litres) are now Commerce and Economic Development Bureau at less than HK $200, according to a posting on a social networking website. Paul Chan said the Financial Secretary was to encourage the trade in premium spirits and related high value-added industries, while striking a balance between alcohol consumption and health.
The vice-president of the Hong Kong General Chamber of Commerce of liquor, man tak-wing, welcomed the government’s listening to the industry’s requests. He said the threshold of HK $200 was quite high and there was no room to reduce the price of spirits priced at HK $700 to HK $800, citing the example of spirits costing HK $300, which would still have to pay HK $210 tax even after the tax reduction, with various expenses, the total cost is close to 700-800 yuan. Zhou guoming, chairman of the Hong Kong Association of Professional Wine Tasters, said the tax cut could stimulate the development of the wine industry and help increase sales in the wine auction market. The chairman of the Hong Kong Bar Association, Mr Vincent Chin, said that the new arrangement would help reduce the cost of running a bar on the one hand, and help expand the consumer base on the other, promoting the vitality of the tourism industry on the other.
The global spirits market is set to surge by 20 per cent to $630bn from $525bn last year, according to so you-ping, founder of the Hong Kong General Chamber of Commerce, which 2027 the industry. The moderate reduction of the liquor tax in Hong Kong is actually a way to loosen the shackles of the industry and promote the trading of high-priced liquor, helping Hong Kong to become the world’s liquor trading center.
There were also some objections. According to a report on the 16th of Hong Kong’s Toutiao Daily Online, legislator Lin Zhexuan and 130 people from the medical sector issued a press release saying, “We are not calling for a ban on alcohol, we just don’t see the need to encourage the public to increase their consumption of spirits,” he said. Pro Bono Secretary of the Hong Kong Alcohol Control Association and former assistant director of health, Cheng Zhuoduan, expressed his opposition on Radio Television Hong Kong on May 14, saying he was encouraging the public to drink. Lowering the liquor tax, Cheng said, “Will definitely increase the number of people who will drink, drink too much wine,” has a negative impact on public health.
Legislator Li Haoran retorted that the two were not necessarily related. Instead, he said, the tax cut could be used as an opportunity to educate the public about fine alcohol and moderate drinking. Li Haoran mentioned that past experience shows that after the abolition of the wine tax more than 10 years ago, the local sales volume did not increase sharply, and the main growth was in trade, therefore, the reduction of duty on spirits has a positive impact on Hong Kong’s trade, logistics, tasting and sales.
On the 16th, John Lee reiterated that alcohol was not encouraged and that the tax reduction was not intended to encourage the public to drink. He also stressed that the administration had struck a balance with the relevant arrangements and that at present, all alcoholic drinks were still subject to tax, 350 companies and 1,000 jobs added in the year after wine tax exemption. Lam also admitted that although he did not support the tax cut, more than 80 per cent of the imported spirits were priced at less than HK $200, so the impact was limited and far lower than expected.
Hong Kong media said that in Hong Kong bar popular all kinds of cocktails, many of the base liquor are spirits. At the same time, the mainland sauce-flavor liquor market is emerging in Hong Kong. Wen Derong, vice-president of the Hong Kong General Wine Chamber of Commerce, previously said that mainland Baijiu is still in its infancy in Hong Kong, with less sales and much room for development. There was once a Guizhou business delegation coming to Hong Kong, which was a good opportunity for Hong Kong to attract business, but during the exchange of wine merchants that Hong Kong liquor tax is too high, immediately backed out.
On the 17th, the Hong Kong Sing Tao Daily said in a commentary that the HKSAR government had not abolished all taxes, but only reduced some of the tax rates above HK $200, at present, about 85% of Hong Kong’s liquor imports are priced at or below HK $200, and those who can afford to consume more than HK $200 may not care much about the tax adjustment. “Overall demand for high-priced spirits will increase to a certain extent, but it will not get out of hand like a runaway horse,” he said, adding that the“Red wine experience” shows that eliminating taxes on alcohol does not necessarily lead to an increase in per capita drinking. The article said that the SAR government’s adjustment of alcohol tax this time is an attempt to boost the economy and promote long-term economic development, with spillover effects, while taking public health into account, drive the development of catering industry, tourism, import and export industry, hotel industry, small and medium-sized enterprises, also can create bartenders, waiters, salesmen and other new positions.