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John Tsang on RTHK re Tobacco Tax

RTHK 29/2/08 Transcript

Subject: Phone in: Budget Review 2008
Presenters: Bryan Curtis and Nick Beacroft
The Financial Secretary, Mr John Tsang, answers listeners’ questions about his 2008-2009 Budget Speech.
(Transcription of relevant Tobacco Tax portion of phone in only.)

FS: Financial Secretary, John Tsang
BC: Bryan Curtis
NB: Nick Beacroft

Approx Time code: 15.38 minutes

BC: We have an email here from James which is actually a letter written into the South China Morning Post, but I don’t think that the writer would mind us reading it out. It’s from James and the letter is actually from Anthony Hedley at the University of Hong Kong so you might know what it’s about. [Quoting]

“As expected John Tsang failed to use his budget to increase tobacco duty to protect community health and help pay for the burden of care created by disease caused by tobacco. He continues the recent tradition of a succession of financial secretaries of adopting a firm tobacco industry-friendly position, protecting brand value and directly facilitating the promotion of cheap tobacco to youth. It’s clear that the treasury dictates public health policy or lack of it and refuses to apply fiscal measures even when they are proven to be needed. They are able to do this regardless of the evidence based advice of the Department of Health and the Food and Health Bureau.” He wraps up “as we struggle to contain the need and demand for health care perhaps the government auditor could now adjudicate on the bizarre incongruity of government actions.” That’s from Dr. Anthony Hedley.

FS: Well, tax is only one way to reduce the smoking habit in Hong Kong and I think education is a lot more important and I really hope that Dr. Hedley would dedicate a lot of his resources to educating people about the wrong of smoking. I think that would really help reduce it in a more permanent way, then the young children and adults of Hong Kong can learn the bad things about smoking. And I think that would be a more permanent way of reducing the smoking habit.

NB: But why don’t you use the tax stick to dissuade people from taking up smoking?

FS: This is one way of doing it but I think we need to take a more balanced approach in what we are doing. We already have a pretty high tax there and if we were to raise it at this time it would no doubt increase the smuggling activities.

NB: Yes but we’re not being held to ransom by the smugglers, we have our own policy. By putting up a tax you’d discourage people from smoking and you will snub the smugglers because every year our financial secretary comes on this programme and says ‘we can’t increase the tax because the smugglers will increase their business’. We’re being held to ransom by the smugglers!

FS: No surely not. But this is one aspect.

NB: But surely yes I think is the answer.

FS: But surely we need to really look into all different aspects and I think tax is one aspect, it’s just one aspect. It is now about 80-something cents per cigarette now. We could raise it further no doubt but there are other things that we can do better, such as education.

BC: Perhaps ancillary to that – if you look at the amount of money that the government has spent on health, we spent 31 or 32 billion dollars in 2001 and we spent 31.6 billion last year. How come we haven’t seen any increase – and I think it’s almost exactly the same for education. That education was slightly lower spending last year than it was in 2001/02.

FS: No I think it has been increasing in both, on both sides. I think you need to look at the full picture…I don’t have…

BC: Well I have the picture here. In 2001/2002 we spent 32 billion dollars on health and only 31.7 I believe last year.

NB: That’s right 31.6 billion in 2007/8 and as Brian says, 32 billion back in 2001.

So we seem to be spending less money on health and education. Why is there this under-spending?

FS: No. In 2007/08 the original estimate was 30 billion dollars and we are estimating 32.5 billion this year for health alone.

NB: Well in any case roughly the same as in 2001/02 so some people would say the economy has gotten bigger and yet we seem to not be spending more on things like health and education.

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