Hong Kong may lose billions in tax revenue over smoking restrictions: lawmaker
Legislator Edward Leung argues tax earnings could be lost as smokers shift to illicit cigarettes, with no major reduction in smoking rate
Proposed steps to reduce smoking in Hong Kong could slash tax revenue by billions of dollars without significantly cutting down on tobacco use due to smokers shifting to illicit cigarettes, a lawmaker has warned, ahead of the legislature’s scrutiny of the measures.
Among the 10 control measures first announced in June last year, the most controversial was the banning of flavoured smoking products, with authorities saying it would prohibit all flavours except menthol by 2026 at the earliest, while the latter would be tackled at a later stage.
“There are worries that the measures may not help much in cutting the smoking rate but could instead lead more people to smoke illicit cigarettes,” lawmaker Edward Leung Hei, from the Democratic Alliance for the Betterment and Progress of Hong Kong, told a radio programme on Thursday.
“Authorities estimated the revenue would rise to HK$9 billion [in 2024-25] after a tax raise, but it fell short of expectation in the end,” he said, noting the city’s revenue from tobacco duty was about HK$7 billion (US$900 million) in 2023, with tax earnings from tobacco lost to sales of illicit cigarettes.
Leung also pointed out the smoking rate had dropped only slightly from 9.5 per cent in 2021 to 9.1 per cent in 2023, when the tobacco duty was raised. There was a bigger decrease from 10.2 per cent in 2019 to 9.5 per cent in 2021 before the tax increase.
“The decrease in the smoking rate might not necessarily align with the increase in tobacco duty,” he said.
The Post earlier reported the Health Bureau would launch the 10 control measures in phases to further reduce Hong Kong’s smoking rate to 7.8 per cent.