Policy Address 2024: Hong Kong slashes the liquor tax to 10% to boost the industry growth

Chief Executive Lee Ka-chiu decided to reduce the tax for high-end liquor products to 10% to save the sluggish local industries on Wednesday in his latest policy address.

The Hong Kong government said the duty with an import price of more than HK$200 will be lowered to 10% for the portion above HK$200 from 100%, effective on Wednesday.

Simon Lee Hoey, one of the legislative council members who proposed the tax cut, said the cut is in the hope of pushing higher-quality alcohol consumption. 

“The lower liquor tax would make a significant change as we can bring various choices to consumers,” said Zach Chan, director of sales and marketing of Hong Kong Liquor Store, “ Besides, it can also stimulate the high value-added industries and facilitate the liquor’s trades.

Under the heavy tax policies, the average drinking volume of Hong Kong residents is at a relatively lower level compared with the cities in the Western Pacific region, according to the city’s health department.

The decrease in the liquor tax will have a similar effect as the red wine tax cut in 2008 to spark the related products, Chan added.

The number of wine-importing companies rose to 800 in 2023 from 2008, and the number of wine retailers increased more than five times last year compared to 16 years ago, according to HKTDC. 

"We regard the cut of liquor as good news to increase sales as it allows us to present our customers with more diverse products," said Cyrus Lau, the owner of  Zhangmen bar in Mongkok, "We are collaborating with liquor sellers to launch a series of new menus for liquor."

Chan added that the lower liquor tax reduces costs for retailers and bar owners, allowing them to use it to give back to customers. 

However, the Hong Kong Alliance for Advocacy Against Alcohol was concerned about potential harm to public health and worried that a greater diversity of liquor would enhance alcoholism in their statement before the policy address.

“Alcoholism has nothing to do with tax cuts because people who are in favour of liquor won’t drink less because of high prices,” said Simon Lee. “The cut on liquor tax won’t cause overconsumption instead of better consumption,” 

Wu Nan, a student from Hong Kong Polytech University, shared a similar view: “The cut of tax won't affect my shopping plan because it is still cheaper to buy alcohol in Shenzhen.”

-The graphic is contributed by Leung Ho-yeung.