Cigarette tax still failing to meet international standard

Increase of tax by HK$4 per pack fails to meet 70% level recommended by WHO, as some manufacturers have raised their prices

PUBLISHED : Thursday, 06 March, 2014, 12:13pm
UPDATED : Thursday, 06 March, 2014, 12:13pm

Tax on cigarettes is still failing to meet levels recommended by the World Health Organisation, despite the increase announced in last week’s budget, the Council on Smoking and Health has warned.

Lisa Lau Man-man, chairwoman of the council, said on Thursday that government efforts to increase the amount of tax to the 70 per cent level recommended by the WHO had failed because some cigarette manufacturers had responded by raising their prices.

In his budget report last week, Financial Secretary Tsang Chun-wah announced a tax increase of HK$4 on each pack of cigarettes – from HK$34 to HK$38. The prices of different brands of cigarettes vary, but according to Lau, the average is around HK$50, that is, about HK$54 after the tax increase.

HK$38 tax in a HK$54-priced pack of cigarette would have reached the WHO recommendation of 70 per cent tax.

However, some manufacturers increased their prices by HK$1 a pack at the same time as the budget announcement, said Lau.

HK$38 tax in a HK$55 pack of cigarette was only 69 per cent tax, said Lau.

“It’s like a chasing game each time,” she said in a radio interview. “The tax increase was too little this time as it gave space for manufacturers to raise prices and increase profits. They ride on your tax increase to make their price increase less obvious.”

She added that some manufacturers lowered their prices at the same time, some to HK$45 a pack, to attract smokers less able to afford expensive cigarettes.

The council has been calling for the government to double the tax to HK$68 per pack, taking the retail price to about HK$84, but the tax increase this time was only by 11.8 per cent. The last two increases were 41.5 per cent in 2011 and 50 per cent in 2009.

Lau said that raising the tobacco tax was a very effective way to encourage people to quit smoking, smoke less, and deter young people from picking up the habit. Allocating more resources for cessation services should accompany tax rises to help people kick the habit, she said.