Budget increase in Hong Kong's tobacco tax likely to be small

Compromise expected to see price of a pack of cigarettes rise by HK$4 to HK$8

PUBLISHED : Saturday, 22 February, 2014, 3:55am
UPDATED : Saturday, 22 February, 2014, 3:55am

Any increase in the tobacco tax in next week's budget is expected to be mild, with the government torn between activists' calls for a doubling of the duty and those of the biggest pro-government party for the tax to be frozen.

This emerged yesterday as officials made last-ditch efforts to agree a figure while balancing the demands of different groups.

The government is expected to propose raising the tax to 70 per cent of tobacco products' average retail value - the minimum percentage recommended by the World Health Organisation. The present tax of HK$34 on a pack of 20 cigarettes represents 65 to 68 per cent of the price.

Popular international brands such as Camel and Marlboro cost HK$50 to HK$52 a pack, while some mainland brands such as Double Happiness cost HK$43.

The suggested tax increase would raise the price of a pack by between HK$4 and HK$8.

Such a rise is backed by several political parties, but major pro-government party the Democratic Alliance for the Betterment and Progress of Hong Kong has rejected any tobacco tax increase.

The party remains one of the biggest obstacles to the government introducing a significant increase.

"We have expressed to the government our reservations about a cigarette tax increase," chairman Tam Yiu-chung said.

He said it was doubtful whether a price rise would have any effect in discouraging smoking, while it would certainly add to the burden of low-income families. His party would require more discussion to decide whether to pass the proposed budget if it included a duty increase on tobacco.

Anti-smoking activist Lam Tai-hing, a professor of community medicine at the University of Hong Kong, said a small tax increase would not be enough to push smokers to quit.

However, he said: "Such a tax increase is definitely better than no increase, and will have some effects which must be measured and monitored."

Lam has been calling for the tobacco tax to be doubled, pushing the price of a HK$50 pack to HK$84.

He believes that such a measure would prompt a tenth of the city's estimated 650,000 smokers to kick the habit in the next two years, reducing the smoking population from 10.7 per cent to below 10 per cent.

If Financial Secretary John Tsang Chun-wah does announce a cigarette tax increase on Wednesday, it would go into effect immediately.

Lam said the government might be concerned that if a steep increase was voted down by legislators it would have the painful task of repaying the extra tax to customers who bought cigarettes in the meantime.

A source in the Food and Health Bureau said any increase in tobacco tax would be the outcome of thorough consideration by the government.