Industry advocates for reducing liquor tax to below 30%

Chief Executive John Lee is set to release a new policy address next month. Earlier, various political parties and groups proposed the exemption or reduction of liquor taxes.

The issue of reducing liquor taxes has been discussed in Hong Kong for many years. This year, both major parties in the Legislative Council, the Democratic Alliance for the Betterment and Progress of Hong Kong (DAB) and the Business and Professionals Alliance for Hong Kong, have pushed for the government to lower or abolish liquor taxes; the New People's Party has suggested changing to a uniform volume-based tax.

Internal government sources indicate a positive response to the proposals for reducing or exempting liquor taxes. The Health Bureau is concerned about potential impacts on public health and the possibility of indirectly encouraging alcohol consumption.

Data presented to the Legislative Council in July showed that since the abolition of the wine tax in 2008, per capita alcohol consumption has not significantly increased—from 2.53 liters in 2005 to 2.87 liters in 2017, an increase of less than 10%, with a declining trend during the pandemic, dropping to 2.29 liters in 2022.

The government levies a 100% tax on alcohol with a concentration higher than 30% at 20 degrees Celsius, which is higher than many neighboring regions now. The Financial Services and the Treasury Bureau are currently calculating the economic impact of adjusting the liquor tax to see if it will actually exceed the original tax revenue.

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