Hong Kong to increase hike tobacco/alcoholic drinks/departure taxes

HONG KONG (AFX-ASIA) - Financial Secretary Donald Tsang said he will increase tobacco, alcoholic beverages and departure taxes. Unveiling his year to March 2002 budget at the Legislative Council, Tsang announced a 5.0 pct hike in tobacco duty with immediate effect. The increase will generate additional revenue of 130 mln hkd in the year to March 2002 and 580 mln hkd over the next four years. Tsang also announced an increase in duty to 40 pct from 30 pct on liquors with alcoholic content of 30 pct and below with immediate effect. He said duties on alcoholic beverages, except for wine, have remained unchanged since 1994. Duties on strong spirits or wine, however, will remain unchanged as they already carry taxes of 100 pct and 60 pct, he said. "Increasing these duty rates might significantly push up retail prices and risk a switch to the consumption of cheaper products, defeating my objective of increasing revenue," he added. The increase in liquor duty is expected to generate additional revenue of 90 mln hkd in the year to March 2002 and 360 mln hkd over the period to 2004 to 2005. Tsang also proposed to increase the air passenger departure tax from 50 hkd to 80 hkd. In addition, he is proposing to include passengers departing by helicopters. The proposal will only take effect after the enactment of the relevant legislation, to allow the airlines and helicopter operators sufficient time to make the necessary arrangements. Tsang said the hike in departure tax will not affect the city's tourism, airline businesses or airport operations as it will still be the lowest in the region for international flights. He said the availability of good facilities, attractive tourist spots and quality service is far more important. The increase will generate additional revenue of 170 mln hkd in the year to March 2002 and 1.3 bln hkd over the next four years. Tsang also proposed a 10 pct increase in driving licence fees and in vehicle licence fees for private cars, motor cycles and motor tricycles. The new fees will take immediate effect for new licences while the new fees will apply only to existing licences expiring on or after July 7, 2001. The increase in the fees will bring in additional revenue of 160 mln hkd in the year to March 2002 and 1.1 bln hkd over the next four years.

Related stock : (NIL)