Finance

Shelve alcohol tax cuts, they're only being pocketed by the trade

PUBLISHED : Saturday, 02 June, 2007, 12:00am
UPDATED : Saturday, 02 June, 2007, 12:00am

Liberal Party chairman James Tien Pei-chun has called for further tax cuts on wine ('Cut wine tax further: Liberal chief', May 29). He reckons his proposal 'would benefit both consumers and wine dealers, allowing for more wine-trading deals to be made in Hong Kong'.


I notice that the Liberal Party has been a key force recently in lobbying the government for substantial cuts to tax on alcohol.


In the 2007-2008 budget, the financial secretary announced tax on alcohol would be halved, reducing the duty on wine from 80 per cent to 40 per cent, and on beer, from 40 per cent to 20 per cent.


He believed this would help promote the development of Hong Kong's catering industry, tourism, and wholesale and retail trades on alcoholic beverages, thereby benefiting the community at large. He said the scheme would cost the government about HK$350 million a year.


Mr Tien's call for further cuts on wine came as some lawmakers stepped up the demand for beer sellers to cut prices after the reduction in tax. It is abundantly clear that the community at large has not been getting the benefits envisaged by the financial secretary in his budget.


'A bottle of good wine costs tourists more than the meal they pay for and no wonder everybody is saying that the cost in Hong Kong is very high,' Mr Tien said


In short, he has revealed that the retail price of alcoholic beverages is too high, even though tax concessions have been given. This is something that the supply-to-retail chain needs to resolve, and no one else.


Democrat Sin Chung-kai has proposed a one-year monitoring period on beer sellers, to see whether they reduce prices after the tax cut. In the face of what has happened, I believe that postponement of the tax cut would be a better alternative.


In view of the fact that the community at large has not been getting the benefits foreseen by the financial secretary, the HK$350 million a year from the scheme could be put to better use, rather than it being pocketed by the trade.


Alex Hung, Mong Kok