Wine drinkers in Hong Kong did benefit from sales tax cut

PUBLISHED : Tuesday, 05 February, 2008, 12:00am
UPDATED : Tuesday, 05 February, 2008, 12:00am

Michael Chugani's Public Eye column ('Beware, the wine profiteers are at it again', January 30) requires clarification.

Last year, after it was announced in the budget that taxes for both wine and beer were to be halved, wine suppliers, retailers and restaurants passed on the benefits to customers in varying degrees.

The retail price reductions were confirmed by the International Wine and Spirits Record, an independent UK-based wine and spirits market research firm, which found that retail prices of around 90 different brands of wine sold in Hong Kong had fallen by an average of 15 per cent between 2006 and 2007.

As for restaurants, Lan Kwai Fong Group moved swiftly to lower retail prices.

That the beer industry had an issue about passing on benefits might have created the impression that the problem was industry-wide.

Building a regional wine hub in Hong Kong will benefit many different sectors such as trading, exhibition, auctions and storage.

The Hong Kong Wine and Spirits Industry Coalition conducted research over several months based on data gathered from London, Hong Kong and the United States.

It concluded that the removal of the current 40 per cent duty could generate an additional HK$4 billion a year.

This would come from sales in fine wine sales, storage, exhibitions and auctions. Combined with an estimated HK$1 billion fine wine market today, the hub could be worth HK$5 billion shortly after the tax is abolished.

More jobs will also be created at different levels in the related industries.

The success of Hong Kong is built largely on a favourable tax regime and investment-friendly environment.

Such a system aims to enable business to thrive so as to boost the international position and economic status of Hong Kong. The same principle should be applied to the wine industry.

Tommy Cheung Yu-yan, honorary chairman of the Hong Kong Wine and Spirits Industry Coalition and legislative councillor for catering