HK's traders say cut in spirits tax not deep enough

Govt's tax cuts seen as unlikely to boost city's competitiveness

- Magdalene Fung

HONG KONG – Hong Kong's leader has slashed a longstanding duty on premium spirits to boost the city's competitiveness as a liquor hub, but industry players say deeper cuts are needed.

Chief Executive John Lee, in his annual policy address on Oct 16, announced the reduction of a 100 per cent import duty on spirits with an alcohol content of more than 30 per cent to just 10 per cent for the portion priced above HK$200 (S$34).

This means that a 100 per cent duty will still be paid on the first HK$200 of a spirit's import price, although the duty drops to 10 per cent after that.

The move comes ahead of a three-day International Wine and Spirits Fair from Nov 7, at which it is hoped the tax cuts will bring more business opportunities to those in the trade.

The policy change "makes Hong Kong more competitive not only as a hub in the high-value liquor trade but also in its related industries, for example, auction houses for liquor bidding", the Trade Development Council's (TDC) deputy executive director Sophia Chong told the media on Oct 21.

But the liquor industry argues that the new tax cuts do not go far enough to make a sufficiently significant difference to the city's recovering economy, which has been battered in recent years amid changing consumption patterns.

The change does not affect the duty on hard liquor with an import price of HK$200 or less. This means 85 per cent of the alcohol in the market will not enjoy any tax breaks.