Hong Kong tobacco tax hike would save lives and help city make money, so why not?
With the looming prospect of leaner tax revenue and therefore lower government spending, this would be a good year to increase the tobacco tax.
Hong Kong’s tobacco tax has been frozen for most of the last decade, contrary to recommendations by health economists from the World Health Organisation, World Bank, Asian Development Bank, International Monetary Fund, and others.
These are all in agreement that a tobacco tax reduces youth uptake, encourages adults to quit, raises government revenue, does not cause an increase in illegal trade, and offsets some of the huge costs that government and society (not the tobacco industry) have to shoulder for tobacco-attributable health care and other costs.
The WHO recommends that tobacco tax should be increased to at least 75 per cent of the retail price, but the tax on major cigarette brands in Hong Kong still accounts for only around 64 per cent.
The ADB notes that tobacco tax increases are a win-win measure, in terms of reduced disease and disability from smoking, coupled with higher revenue earnings.
The ADB extends its analysis to label tobacco taxes as pro-poor. The IMF states that tobacco tax is a core component of fiscal policy the world over, raising revenue for governments.
The World Bank lists six cost-effective tobacco-control interventions, top of which is a tobacco tax increase (followed by smoke-free areas, public information, bans on all promotion, package warnings, and help with quitting).
Even if Hong Kong’s tax authorities fail to see health as within their remit, or see only financial inflows from the cigarette sales and not the enormous costs of tobacco to the economy, they should heed the words of informed fellow economists.
It is within the domain of our financial secretary to raise tobacco tax in his budget announcement on February 26 to raise revenue and save lives. Not just in 2020 but annually.
Dr Judith Mackay, director, Asian Consultancy on Tobacco Control