The reduction in duty on premium spirits in Hong Kong is not expected to have a significant impact on the wine and spirits industry or the general public. The duty on liquor with an alcohol content above 30 percent and an import price of over HK$200 has been decreased from 100 percent to 10 percent for the portion above HK$200.
While the Hong Kong General Chamber of Wine and Spirits welcomed this move, they believe that the change will primarily benefit luxury products. Raymond Luk, who chairs the chamber’s economic policy and social affairs committee, mentioned that it may not be easy for the industry or the catering sector to lower prices across the board. He highlighted that the reduction will mainly benefit expensive items with a retail price of over HK$1,000.
Eric Man, the general manager at Wai Shing Wine and Spirits, noted that only around 20 percent of customers purchase spirits priced over HK$1,000. He had hoped that citizens would be able to buy and enjoy better quality liquor within the HK$500 to HK$800 range, but with the current policy, consumers may need to increase their budget to access higher-end spirits.
Man suggested reducing the HK$200 threshold for the duty cut by half to include a wider variety of liquors. Luk supported this idea, stating that it would enhance the competitiveness of Hong Kong’s liquor market in the long run. He believes that the reduction in taxes could position Hong Kong as a high-end spirit destination and stimulate activities related to high-end prestige spirits like trading, distribution, and auctions.
Chief Executive John Lee explained that the decision to reduce the tax on hard liquor was driven by market opportunities similar to those observed after the abolition of wine duties in 2008. Lee emphasized the government’s goal to boost trade in high-end liquor, drawing parallels to the positive outcomes seen following the removal of wine duties.
While the Licensed Bar and Club Association supports the tax cut, they anticipate that the benefits may not be immediate. Ben Leung, the association’s founding president, mentioned that the measures could enhance Hong Kong’s competitiveness in the global liquor market over time by introducing more brands and spirits to the local market. However, he pointed out that bar operators may not see immediate advantages as importers and agents may need time to adjust their pricing strategies.
Leung urged the Chief Executive to explore ways to promote the local night economy effectively, suggesting that this could create opportunities for small to medium enterprises to thrive. By reviewing and enhancing strategies to support the night scene, Hong Kong could potentially strengthen its position in the liquor market and encourage economic growth within the sector.