Hong Kong Passes Swingeing Increase In Tobacco Tax

by Mary Swire, Tax-News.com, Hong Kong

21 June 2011

The bill to give effect to the Hong Kong government’s budget proposal to increase the rates of duty on various types of tobacco was passed by the Legislative Council (LegCo) on June 15.

The Dutiable Commodities (Amendment) Bill 2011 implements the proposal in Hong Kong’s 2011-12 budget to increase the duty rates on all tobacco products by 41.46%. A pack of cigarettes is now priced at HKD50 (US$6.41), 70% of which is taken by tobacco duty.

The rise in duty was introduced by the government on the established policy grounds of protecting public health by discouraging smoking and minimising the impact of passive smoking on the public.

However, the measure had, since the budget announcement, caused some concern as the government had already increased tobacco duty by 50% in 2009-10, and there are also a raft of measures on strengthening tobacco control through LegCo’s previous amendments to the Smoking (Public Health) Ordinance in 2006, including no-smoking areas in public places and workplaces, the introduction of a complete ban on all forms of tobacco advertising, and a tightening of restrictions on the packaging and sale of cigarettes.

The increased cost of smoking had raised significant protests that the policy, while laudable on health grounds, is regressive and has a disproportionate effect on the poorest individuals, particularly at a time when there is an intense discussion on the increasing wealth gap in Hong Kong.

The Secretary for Food and Health, Dr York Chow, pointed out that the government’s emphasis now is on quit smoking campaign. “This year”, he said, “the government has injected HKD42m into the campaign programmes throughout Hong Kong.”

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