BUDGET 2009 – Ella Lee and Danny Mok – Feb 26, 2009 – SCMP
Confusion arose last night over cigarette retail prices, with two major tobacco agents taking the unusual step of not raising charges immediately after a 50 per cent increase in tobacco duty was announced in the budget.
Some retailers immediately raised prices, while others imposed a limit on the number of packs each customer could buy.
British American Tobacco Hong Kong and Hong Kong Tobacco did not raise charges yesterday, along with most 7-Eleven outlets and other vendors.
But most 7-Eleven stores allowed each customer to buy only two packs a time. Smokers were seen rushing for cigarettes at outlets of Circle K, which did not raise charges.
Most petrol stations did not increase their prices.
However, some vendors raised prices by HK$8 a pack after the budget.
The 50 per cent increase in duty was welcomed by anti-smoking activists. However, they were quick to warn that the measure should not lead to any “trade-off” with the tobacco industry.
Financial Secretary John Tsang Chun-wah announced that the duty would be increased from about 80 HK cents per cigarette to HK$1.20, with immediate effect. The duty for cigars was increased from HK$1,035 per kg to HK$1,553. Tobacco duty was last raised in the 2001-02 financial year – from 76 cents to 80 cents a cigarette.
Executive secretary of the Tobacco Association of Hong Kong Raza Zulfiqar said the trade was disappointed with the “drastic increase” in tobacco duty, adding that it would only stimulate smuggling of cigarettes. He said individual tobacco companies would decide later on the new retail prices of their products.
A senior government source said the increase was not aimed at increasing revenue for the administration but at reducing the smoking population. There are about 754,800 smokers in Hong Kong, or 13.2 per cent of the population aged over 15. Fears had been raised about the increasing number of young and female smokers in Hong Kong, the source said.
Secretary for Food and Health York Chow Yat-ngok said the measure could deter more young people from smoking.
Tobacco tax has been increased from HK$16 to HK$24 per pack of cigarettes, with retail prices of some popular brands expected to rise from about HK$29 to HK$37 a pack.
The anti-smoking group Clear the Air said the government must legislate for the excise tax to be not less than 80 per cent of final retail cost, to prevent tobacco companies reducing prices to offset the tax rise.
Anti-tobacco groups had been calling for the administration to increase tobacco duty after government figures showed a 13.8 per cent rise in cigarette consumption since 2006, despite a smoking ban in restaurants.
Anthony Hedley, a professor in community medicine at the University of Hong Kong, welcomed the move and said it plugged a big hole in tobacco control.
“Credits should go to the NGOs, the Department of Health and the Food and Health Bureau which have pushed for the increase,” he said.