The wine and spirits industry on Wednesday said Hong Kong's reduction in duty on premium spirits won't have a huge effect on the sector, or the public.

The duty on liquor with an alcohol content above 30 percent and with an import price of over HK$200 has been cut from 100 percent to 10 percent for the portion above HK$200.

The Hong Kong General Chamber of Wine and Spirits welcomed the move, but said the change will only be noticed when it comes to luxury products.

"I think it's not easy for the industry, also for the catering sector to slash prices at this moment. I think it only benefits those expensive items, for example, [those with a] retail price of over HK$1,000," Raymond Luk, who chairs the chamber's economic policy and social affairs committee, told RTHK.

Eric Man, general manager at Wai Shing Wine and Spirits, said only around 20 percent of customers buy spirits that are priced over HK$1,000.

"We originally hoped that citizens would be able to use around HK$500 to HK$800 to buy and enjoy liquor of better quality. But the policy now... consumers will still have to increase their budget to get better spirits, it is hard to tell whether they will be willing to do that," he said.

Man said he would like to see the HK$200 threshold for the duty cut reduced by half, so more kinds of liquor would be covered.

Luk added that such a move would increase the competitiveness of Hong Kong's liquor market.

"For the current rates under the new policy, we are still the highest in East Asia. But in the long term, I think it's possible that we'll gain an increased appeal as a high-end spirit destination due to the reduction in taxes, as well as the speeding up of the development of activities related to high-end prestige spirits like trading, distribution and auctions," he said.

Chief Executive John Lee said officials moved to slash the tax on hard liquor because they saw market opportunities similar to the ones that followed after the duty on wine was abolished in 2008.

Speaking at a press conference, Lee said officials made the decision considering that around 85 percent of hard liquor in the market is priced under HK$200.

He said the objective was to boost the trade in high-end liquor and hoped it would have a similar effect to the abolition of wine duties.

Lee noted the import and re-export value of red wine last year rose by 375 percent compared to 2007, the year before the product became tax free in Hong Kong.

"Over one year after wine duty has been reduced, we saw an increase of about 350 operators of wine, and an increase of about 1,000 jobs. The income for that sector increased by about 35 percent," he said.

Lee stressed the government isn't encouraging people to drink, saying it has struck a balance between public health and the need to develop the hard liquor market.

The Licensed Bar and Club Association, meanwhile, said that though bar operators support the tax cut, it might not bring immediate benefits.

The association's founding president, Ben Leung, said he thinks the measures can boost Hong Kong's competitiveness in the global liquor market in the long run, because more brands and different types of spirits would enter the local market.

"But bars cannot benefit immediately because above them [in the chain], there are importers and agents, they themselves might need some time to digest [the news] and make adjustments. They might not have room to lower prices immediately," he said in a statement.

Leung also called on the Chief Executive to review how to better promote the local night economy, saying that would "expand the room for survival" for small to medium enterprises.
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Last updated: 2024-10-16 HKT 19:18